c. mahendra infojewels limited

DRAFT RED HERRING PROSPECTUS
Dated: 28th March, 2012
Please read section 60 B of the Companies Act, 1956
100% Book Building Issue
C. MAHENDRA INFOJEWELS LIMITED
Our Company was originally formed as Partnership firm under the name and style of C. Mahendra InfoJewels vide partnership deed dated 24th February, 2000 Subsequently
the partnership firm was converted into Public Limited Company under part IX of the Companies Act, 1956 in the name C. Mahendra Infojewels Limited on 10th August
2010. For further details in relation to the corporate history of our company, refer to the chapter titled “History and other corporate matters” beginning on page no 101 of
the draft Red herring prospectus. Our Corporate Identity No. is CIN U36912GJ2010PLC061930.
REGISTERED OFFICE: 214/A, Paradise Complex, Sayaji Gunj, Vadodara- 390005. Tel. No.: +91-265-2363493, Fax No.: +91-265-2363493.
CORPORATE OFFICE: Plot No 16(p) & 17, 28 & 29(p), Seepz(MIDC), Andheri (East), Mumbai 400096.
Tel. No.: +91-22-40707070, Fax No.: +91-22-28292258. Email: [email protected]; Website: www.cminfojewels.com
Company Secretary: Ms. Shradha Bhimani. Contact Person/ Compliance Officer: Mr. Akash Parikh.
PROMOTERS: MR. SHRIKANT PARIKH, MR. JESINGHBHAI PARIKH, MINAL INDUSTRIES LTD. and C. MAHENDRA JEWELS PVT. LTD.
PUBLIC ISSUE OF 1,30,00,000 EQUITY SHARES OF ` 10/- EACH AT A PRICE OF ` [] PER EQUITY SHARE (INCLUDING A PREMIUM OF ` [] PER
EQUITY SHARE) FOR CASH AGGREGATING UPTO ` [] CRORES (THE “ISSUE”), BY C. MAHENDRA INFOJEWELS LIMITED (THE “COMPANY” OR
THE “ISSUER”). THE ISSUE WILL CONSTITUTE 34.21% OF THE FULLY DILUTED POST ISSUE PAID UP CAPITAL OF THE COMPANY.
PRICE BAND: ` [] TO ` [] PER EQUITY SHARE OF FACE VALUE OF ` 10 EACH.
THE FACE VALUE OF THE EQUITY SHARES IS ` 10.
THE FLOOR PRICE IS [] TIMES THE FACE VALUE AND THE CAP PRICE IS [] TIMES THE FACE VALUE
The Price Band and the minimum bid lot size will be decided by our Company, in consultation with the Book Running Lead Manager and advertised at least two working
days prior to the bid/issue opening date.
In case of revision in the Price Band, the Bidding/Issue Period shall be extended for three additional working days after such revision, subject to the Bidding / Issue
Period not exceeding 10 working days. Any revision in the Price Band, and the revised Bidding / Issue Period, if applicable, shall be widely disseminated by notification
to the Bombay Stock Exchange Ltd. (BSE) and the National Stock Exchange of India Ltd. (NSE), by issuing a press release and also by indicating the change on the
website of the Company, Book Running Lead Managers (“BRLM”) and the terminals of the ‘Syndicate member(s)’.
The Issue is being made under sub-regulation (1) of Regulation 26 of the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009 and through the 100%
Book Building Process, wherein upto 50% of the Net Issue shall be available for allocation on a proportionate basis to QIBs, out of which 5% shall be available for
allocation on a proportionate basis to Mutual Funds only. The remainder of the QIB portion shall be available for allocation on a proportionate basis to Qualified
Institutional Buyers, including Mutual Funds, subject to valid Bids being received at or above the Issue Price. Further, not less than to 35% of the Net Issue shall be
available for allocation on a proportionate basis to Retail Individual Bidders and not less than 15% of the Net Issue shall be available for allocation on a proportionate
basis to Non-Institutional Bidders, subject to valid Bids being received at or above the Issue Price.
RISKS IN RELATION TO THE FIRST ISSUE
This being the first public issue of the Equity Shares of our Company, there has been no formal market for the Equity Shares. The face value of the Equity Shares is ` 10/each and the Issue Price of ` []/- per share is [] times of the face value at the lower end of the Price Band and [] times of the face value at the higher end of the
Price Band. The Issue Price (as determined and justified by the BRLM and our Company on basis of assessment of market demand for the Equity Shares by way of Book
Building as stated in ‘Basis for Issue Price’) should not be taken to be indicative of the market price of the Equity Shares after the Equity Shares are listed. No assurance
can be given regarding an active and/or sustained trading in the Equity Shares of our Company or regarding the price at which the Equity Shares will be traded after
listing.
IPO GRADING
This Issue has been graded by [] and has been assigned the “IPO Grading []”, indicating []. For Details kindly refer ‘General Information’ beginning on page 35 and
‘Material Contracts and Documents for Inspection’ beginning on page 343 of this Draft Red Herring Prospectus.
GENERAL RISK
Investments in equity and equity related securities involve a degree of risk and investors should not invest any funds in this Issue unless they can afford to take the risk
of losing their investment. Investors are advised to read the risk factors carefully before taking an investment decision in this Issue. For taking an investment decision,
investors must rely on their own examination of our Company and the Issue including the risks involved. The Equity Shares offered in the Issue have not been recommended
or approved by the Securities and Exchange Board of India (‘SEBI’), nor does SEBI guarantee the accuracy or adequacy of this document. Specific attention of the investors
is invited to the section titled ‘Risk Factors’ beginning on page 14 of this Draft Red Herring Prospectus.
ISSUER’S ABSOLUTE RESPONSIBILITY
Issuer, having made all reasonable inquiries, accepts responsibility for and confirm that this Draft Red Herring Prospectus contains all information with regard to our
Company and the Issue, which is material in the context of the Issue, that the information contained in this Draft Red Herring Prospectus is true and correct in all material
aspects and is not misleading in any material respect, that the opinions and intentions expressed herein are honestly held and that there are no other facts, the omission of
which makes this Draft Red Herring Prospectus as a whole or any of such information or the expression of any such opinions or intentions misleading in any material
respect.
LISTING ARRANGEMENT
The Equity Shares are proposed to be listed on Bombay Stock Exchange Limited (BSE) and National Stock Exchange of India Limited (NSE). Our Company has received
inprinciple approvals from BSE and NSE vide their letters dated [] and [] respectively. BSE shall be the Designated Stock Exchange for the purpose of this Issue.
BOOK RUNNING LEAD MANAGER
REGISTRAR TO THE ISSUE
CORPORATE STRATEGIC ALLIANZ LIMITED
SHAREPRO SERVICES (INDIA) PRIVATE LIMITED
402, Samedh Complex,
Near Associated Petrol Pump,
C.G. Road, Ahmedabad – 380 006, Gujarat- India.
Tel No: +91-79- 2642 4138,
TeleFax No: +91- 79- 4002 4670
SEBI REGN NO: INM 000011260
Email Id: [email protected]
Website: www.csapl.com
Contact Person: Mr. Chetan Sharma
607/608,Sagar Tech Plaza,
A Wing, Sakinaka Junction,
Andheri (East), Mumbai – 400 072, Maharashtra – India
Tel: +91-22- 61915402 / 5404,
Fax: +91-22- 61915444
SEBI REGN NO: INR000001476
Email Id: [email protected]
Website: www.shareproservices.com
Contact Person: Mr. Subhash Dhingreja/ Mr. Satheesh H. K.
ISSUE PROGRAM
BID/ISSUE OPENS ON : []
* Our Company has not considered the option of allocation to/ participation by Anchor Investors.
BID/ISSUE CLOSES ON : [ ]
TABLE OF CONTENTS
CONTENTS
SECTION I – GENERAL
DEFINITIONS AND ABBREVIATIONS
COMPANY RELATED TERMS
TECHNICAL AND INDUSTRY RELATED TERMS
CONVENTIONAL AND GENERAL TERMS/ ABBREVIATIONS
ISSUE RELATED TERMS
PRESENTATION OF FINANCIAL, INDUSTRY AND MARKET DATA
FORWARD LOOKING STATEMENTS
SECTION II – RISK FACTORS
RISK FACTORS
SECTION III – INTRODUCTION
SUMMARY OF INDUSTRY
SUMMARY OF BUSINESS
SUMMARY OF FINANCIAL INFORMATION
ISSUE DETAILS IN BRIEF
GENERAL INFORMATION
CAPITAL STRUCTURE
SECTION IV – PARTICULARS OF THE ISSUE
OBJECTS OF THE ISSUE
BASIS FOR ISSUE PRICE
STATEMENT OF TAX BENEFITS
SECTION V – ABOUT US
INDUSTRY OVERVIEW
BUSINESS OVERVIEW
KEY INDUSTRY REGULATIONS AND POLICIES
HISTORY AND OTHER CORPORATE MATTERS
OUR MANAGEMENT
OUR PROMOTERS AND THEIR BACK GROUND
RELATED PARTY TRANSACTIONS
DIVIDEND POLICY
SECTION VI – FINANCIAL INFORMATION
AUDITORS REPORT AND FINANCIAL INFORMATION OF OUR
COMPANY
FINANCIAL INFORMATION OF OUR GROUP COMPANIES
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
FINANCIAL INDEBTEDNESS
SECTION VII – LEGAL AND OTHER REGULATORY INFORMATION
OUTSTANDING LITIGATIONS, MATERIAL DEVELOPMENTS AND OTHER
DISCLOSURES
GOVERNMENT AND OTHER STATUTORY DISCLOSURES
OTHER REGULATORY AND STATUTORY DISCLOSURES
SECTION VIII – ISSUE RELATED INFORMATION
TERMS OF THE ISSUE
ISSUE STRUCTURE
ISSUE PROCEDURE
SECTION IX – MAIN PROVISIONS OF THE ARTICLES OF ASSOCIATION
MAIN PROVISIONS OF ARTICLES OF ASSOCIATION
SECTION X – OTHER INFORMATION
MATERIAL CONTRACTS AND DOCUMENTS FOR INSPECTION
DECLARATION
PAGE
1
1
2
3
5
12
13
14
24
27
30
34
35
43
53
60
63
74
87
97
101
103
116
124
125
126
149
155
161
164
185
188
199
202
205
247
343
345
SECTION I – GENERAL
Definitions and Abbreviations
Unless the context otherwise requires, the terms and abbreviations stated here under shall have the
meanings as assigned therewith.
Terms
“Our
Company”
or
“Company” or “C mahendra
Info Jewels
Limited” or
“CMIL”, “C Mahendra”, “The
Issuer”.
“We”, “Our”, “us”, The Group
Promoters
Promoter Group
Description
Unless the context otherwise requires these words refer to C. Mahendra
InfoJewels Limited, a public limited company incorporated under the
Companies Act, 1956.
Unless the context otherwise requires, refers to the Company and its
group companies , on a consolidation basis
Mr. Jesingbhai Parikh
Mr. Shrikant Parikh
Minal Industries Ltd.
C. Mahendra Jewels Pvt. Ltd.
Companies, individuals and entities (other than companies) as defined
under Regulation 2 sub-regulation (zb) of the SEBI ICDR Regulations.
Company Related Terms
Terms
Articles / Articles of
Association / AOA
Audit Committee
Auditors
Board of Directors/Board
Depositories Act
Depository
Description
Articles of Association of our Company
Committee of Directors as constituted with Clause 49 of the Listing
Agreement.
The Statutory auditors of our Company, being R.H. Modi & Co.,
Chartered Accountants.
The Board of Directors of Our Company or a committee constituted
thereof.
The Depositories Act, 1996, as amended from time to time.
I.T. Act / IT Act
A body corporate registered under the SEBI (Depositories and
Participant)Regulations, 1996, as amended from time to time.
A depository participant as defined under the Depositories Act.
Director(s) of our Company unless otherwise specified
Foreign Exchange Management Act, 1999, as amended from time to
time, and the regulations framed thereunder.
Foreign Institutional Investor (as defined under Foreign Exchange
Management (Transfer or Issue of Security by a Person Resident outside
India) Regulations, 2000) registered with SEBI under applicable laws in
India.
Period of twelve months ended March 31 of that particular year, unless
specifically stated otherwise.
The Government of India.
Foreign Venture Capital Investor registered under the Securities and
ExchangeBoard of India (Foreign Venture Capital Investor) Regulations,
2000, as amended from time to time.
The Income Tax Act, 1961, as amended from time to time.
I.T. Rules
Inome Tax Rules, 1962, as amended from time to time.
Indian GAAP
Generally accepted accounting principles in India.
Depository Participant
Director(s)
FEMA
FII / Foreign Institutional
Investor
Financial Year / Fiscal /
Fiscal Year/FY
GoI / Government
FVC
1
Memorandum / MoA/
Memorandum of Association
RBI Act
Registered Office
RoC / Registrar of
Companies
SEBI
The Memorandum of Association of our Company.
The Reserve Bank of India Act, 1934, as amended from time to time.
214- A, Paradise Complex, Sayaji Gunj, Vadodara, 390005
ROC Bhavan, Opp. Rupal Park Society, Behind Ankur Bus Stop,
Naranpura, Ahmedabad – 380013
The Securities and Exchange Board of India constituted under the SEBI
Act,1992.
Securities and Exchange Board of India Act, 1992, read with rules and
Regulations thereunder and amendments thereto as amended from time
to time.
SEBI ICDR Regulations, SEBI (Underwriters) Regulations, 1993, as
amended, the SEBI (Merchant Bankers) Regulations, 1992, as amended,
and any and all other relevant rules, regulations, guidelines, which SEBI
may issue from time to time, including instructions and clarifications
issued by SEBI from time to time.
Venture Capital Funds as defined in and registered with SEBI under the
VCF Regulations.
Securities Exchange Board of India (Venture Capital Fund) Regulations,
1996, as amended.
SEBI Act
SEBI Rules and Regulations
VCFs / Venture Capital Fund
VCF Regulations
Technical and Industry Terms
Terms
BIS
BPP/ Best Practice
Principles
CAD
CAM
Carat
CIT(A)
Conflict Diamonds
CPD
DGFT
DTA
G&J
GJEPC
GOI
ITAT
Karatage
KVA
KW
LIBOR
MIDC
ORP
PLR
Rough Diamonds
Description
Bureau of Indian Standards
The term used for a suite of criteria The DTC have compiled to ensure
consumers buying diamond jewellery will be able to rely with confidence
on the ethical standards of the industry. As part of this initiative, clients are
required to undergo third party reviews to ensure that they are in
compliance with the BPPcriteria
Computer Aided Design
Computer Aided Manufacturing
The unit for determining weight of gemstones, 1 carat being equal to 0.2
grams
Commissioner of Income Tax (Appeal)
A conflict diamond (also called a blood diamond) is a diamond mined in a
war zone and sold, usually clandestinely, in order to finance an insurgent
or invading army‘s war efforts
Cut and Polished Diamonds
Director General of Foreign Trade
Domestic Tariff Area
Gems and Jewellery
Gem & Jewellery Export Promotion Council
Government of India
Income Tax Appelate Tribunal
Unit to determine the purity of gold
Kilo Vatt Ampere
kilo-Watt
London Interbank Offered Rate
Maharashtra Industrial Development Corporation
Organised Retail Penetration
Prime Lending Rate
Diamonds as found in their natural state, prior to any polishing work being
Conducted
2
SEEPZ
SEZ
Sightholder
Studded Jewellery
VRV
WTPCG
916
Santacruz Electronic & Export Processing Zone
Special economic zone
Companies selected as eligible to purchase diamonds from The Diamond
Trading Company under its supply and distribution arrangements known
as Supplier of Choice
Jewellery made of gold/platinum/silver which are studded by diamonds
and/or precious stones or semi-precious stones
Veriable Refrigerant Volume
Whole Turnover Packing Credit Guarantee
916 is the grade by which purity of gold is measured for 22 carat jewels.
Conventional and General Terms/ Abbreviations
Terms
Act or Companies Act
ACJM
ADJ
ADJ - I Court
AGM
AAIFR
ASBA
A/c
AS
AY
BR
BG/LC
BRLM
BSE
CAGR
CAN
CMD
CDSL
COP
CJM
DER
DIN
DP/ Depository Participant
DP ID
DTC
EBIDTA
ECS
EGM
EEGC
EPS
FCNR Account
Financial Year/ Fiscal
Year/FY
FDI
FEMA
Full Form
Companies Act, 1956 , as amended from time to time
Additional Chief Judicial Magistrate
Additional District and Session Judge
Additional District Judge
Annual General Meeting
Appellate Authority for Industrial and Financial Reconstruction
Application Supported by Blocked Amount
Account
Accounting Standards issued by the Institute of Chartered Accountants
of India
Assessment Year
Base Rate
Bank Guarantee/ Letter of Credit
Book Running Lead Manager
Bombay Stock Exchange
Compounded Annual Growth Rate
Confirmation of Allocation Note
Chairman & Managing Director
Central Depository Services (India) Limited
Certificate of Practice
Chief Judicial Magistrate
Debt Equity Ratio
Director’s Identification Number
A Depository Participant as defined under the Depository Participant
Act,1996
Depository Participants’ Identification
Diamond Trading Company.
Earnings Before Interest, Depreciation, Tax and Amortisation
Electronic Clearing System
Extraordinary General Meeting
Exchange Earners Foreign Currency
Earnings Per Share i.e. Profit After tax for a fiscal year divided by the
weighted average outstanding number of equity shares at the end of that
fiscal year
Foreign Currency Non Resident Account established in accordance with
the FEMA
The period of twelve months ended March 31st of that particular year
Foreign Direct Investment
Foreign Exchange Management Act, 1999, read with rules and
3
FII
FIs
FSI
FIPB
FVCI
GDP
GIR Number
GoI/Government
HUF
IFRS
I.T. Act
IEC
Indian GAAP
INR / ` / Rupees
IPO
JM-FS
JM
LOP
Mn / mn / Mln
MoU
NA
NAV
NEFT
NOC
NR / Non Residents
NRE Account
NRI
NRO Account
NSDL
NSE
P/E Ratio
PAN
p.a.
PBT
PIO
PLR
RBI
RoNW
ROC
RTGS
RBI
SCRA
SCRR
RBI Act
SCSB
regulations there-under and as amended from time to time
Foreign Institutional Investor (as defined under SEBI FII (Foreign
Institutional Investors) Regulations, 1995, as amended from time to
time) registered with SEBI under applicable laws in India
Financial Institutions
Floor Space Index
Foreign Investment Promotion Board
Foreign Venture Capital Investor registered under the Securities and
Exchange Board of India (Foreign Venture Capital Investor)
Regulations, 2000, as amended from time to time
Gross Domestic Product
General Index Registry Number
Government of India
Hindu Undivided Family
International Financial Reporting Standard
Income Tax Act, 1961, as amended from time to time
Importer Exporter Code
Generally Accepted Accounting Principles of India
Indian Rupees, the legal currency of the Republic of India
Initial Public Offering
Judicial Magistrate - First Class
Judicial Magistrate
Letter of Permit
Million
Memorandum of Understanding
Not Applicable
Net Asset Value
National Electronic Fund Transfer
No Objection Certificate
Non Resident
Non Resident External Account
Non Resident Indian, is a person resident outside India, as defined
under FEMA and the FEMA Regulations
Non Resident Ordinary Account
National Securities Depository Limited
National Stock Exchange
Price / Earnings Ratio
Permanent Account Number allotted under the Income Tax Act,
1961, as amended from time to time
Per Annum.
Profit Before Tax
Person of Indian Origin
Prime Lending Rate
Reserve Bank of India
Return on Net Worth
Registrar of Companies
Real Time Gross Settlement
Reserve Bank Of India
Securities Contracts (Regulation) Act, 1956, as amended from time to
time
Securities Contracts (Regulation) Rules, 1957, as amended from
time to Time
The Reserve Bank of India Act, 1934, as amended from time to time.
Self Certified Syndicate Bank
4
SDM
SEBI
SEBI Act
SEBI Regulations/SEBI
(ICDR) Regulations, 2009
SICA
SEBI Insider Trading
regulations
SEBI Takeover Regulations
Stamp Act
State Government
TIN
UIN
USD/ US$
VAT
VCFs / Venture Capital Fund
VCF Regulations
WGC
Sub Divisional Magistrate
The Securities and Exchange Board of India constituted under the
SEBI Act
Securities and Exchange Board of India Act 1992, as amended from
time to Time
Securities and Exchange Board of India (Issue of Capital and
Disclosure Requirements) Regulations, 2009, as amended from time to
time
Sick Industrial Companies (Special Provisions) Act, 1985.
The SEBI (Prohibition of Insider Trading) Regulations, 1992, as
amended from time to time, including instructions and clarifications
issued by SEBI from time to time.
Securities and Exchange Board of India (Substantial Acquisition of
Shares and Takeovers) Regulations, 1997, as amended from time to
time
The Indian Stamp Act, 1899, as amended from time to time
The Government of a State of India
Tax Identification Number
Unique Identification Number
United States Dollars
Value Added Tax
Venture Capital Funds as defined in and registered with SEBI under the
VCF Regulations.
Securities Exchange Board of India (Venture Capital Fund) Regulations,
1996, as amended.
World Gold Council
Issue Related Terms
Terms
“Allot”, Allotment, Allotted/
Allotment of Equity Shares
Auditors
Application Form
AOA
Allottee
Application Supported by
Blocked Amount/ ASBA
ASBA Public Issue Account
ASBA Bidders/Investor
ASBA Form / ASBA Bid Cum
Application Form
ASBA Bid Revision Form
Bid
Description
Unless the context otherwise requires, Allotment of Equity Shares
pursuant to this Issue
The form in terms of which the investors shall apply for the equity
shares of our Company
Article of Association of company
A successful Bidders to whom Equity shares are allotted
Application Supported by Blocked Amount means an application
(whether physical or electronic) subscribing to an Issue containing an
authorization to block the Bid Amount in their specified bank account
with Self Certified Syndicate Bank
Account maintained by an ASBA Bidder with an SCSB which will be
blocked by such SCSB to the extent of the Bid Amount of the ASBA
Bidder.
A Bidder / an Investor other than QIB Bidder, who intends to apply
through ASBA process.
The Bid-cum-Application Form, whether physical or electronic, used
by an ASBA Bidder to make a Bid, which will be considered as the
application for Allotment for the purpose of Draft Red Herring
Prospectus
The form used by ASBA Bidders to modify the quantity of Equity
Shares or the Bid Price in any of their Bid-cum-Application Forms or
any previous Revision Form(s)
An indication to make an offer made during the Bidding Period by a
prospective investor pursuant to submission of
a
Bid-cum-
5
Application Form to subscribe to the Equity Shares of our
Company at a price within the Price Band, including all revisions and
modifications thereto
Bankers to Issue / Escrow
Collection Banks
Bankers to our Company
Bid Lot/ Minimum bid lot
Basis of Allotment
Bid Amount
Bid/ Issue Closing Date
Bid-cum-Application Form /
Bid Form
Bid/ Issue Opening Date
Bidder
Bidding Centre (s)
Bidding Period or Bidding/
Issue Period or Issue/
Bidding Period or Bid /
Issue Period.
Book Building Process
BRLMs / Lead Manager
Brokers
Board of Directors/ Board
Business day
CAN / Confirmation of
Allocation Note
Cap Price
Cut-off /Cut-off Price
Controlling Branches
For the purposes of ASBA Bidders, it means an indication to make an
offer during the Bidding Period by any Bidder other than QIB Bidder
pursuant to the submission of an ASBA Bid-cum- Application
Form to subscribe to the Equity Shares.
[x]
Bankers to our Company, [].
[•] Equity Shares and in multiples of [•] Equity Shares thereafter
Basis on which the Equity Shares will be Allotted, described in “Issue
Procedure”- Basis of Allotment” on Page []
The highest value of the optional Bids indicated in the Bid-cumApplication Form and payable by the Bidder on submission of the Bid
for this Issue
The date after which the Syndicate will not accept any Bids for the
Issue, which shall be notified in a widely circulated English and Hindi
national newspapers, and a regional language newspaper.
The form in terms of which the Bidder shall make an offer to subscribe
to the Equity Shares of our Company and which will be considered as
the application for allotment in terms of the Draft Red Herring
Prospectus
The date on which the Syndicate shall start accepting Bids for the
Issue, which shall be the date notified in widely circulated English and
Hindi national newspapers and a regional language newspaper.
Any prospective investor who makes a Bid pursuant to the terms of the
Draft Red Herring Prospectus and the Bid-cum-Application Form,
including an ASBA Bidder.
A centre for acceptance of the Bid cum Application Form.
The period between the Bid / Issue Opening Date and the Bid / Issue
Closing Date, inclusive of both days, during which prospective Bidders,
other than Anchor Investors can submit their Bids, including any
revisions thereof.
Book Building Process as provided under Schedule XI of SEBI
(ICDR) Regulations, 2009, in terms of which this Issue is being
made
Book Running Lead Manager to the issue, in this case being Corporate
Strategic Allianz Limited
Brokers registered with any recognized Stock Exchange, appointed by
the Members of the Syndicate
The Board of Directors of a company or committee constituted thereof.
Any day on which commercial banks are open for business
The note or advice or intimation of allocation of Equity Shares sent
to the Bidders who have been allocated Equity Shares after discovery
of the Issue Price in accordance with the Book Building Process,
including any revisions thereof.
The higher end of the Price Band, above which the Issue Price will not be
finalized and above which no Bids will be accepted in this as being ` [•]
Any price within the Price Band finalized by our Company in
consultation with the Lead Manager. A bid submitted at the Cut-off Price
is a valid Bid at all price levels within the Price Band.
Such branches of the SCSBs which co-ordinate Bids received
under this Issue by the ASBA Bidders with the BRLMs, the
6
Depository
Depository Participant
Depositories Act
Designated Branches/ DBs
Designated Date
Directors
Designated Stock Exchange
Draft Red Herring
Prospectus
Electronic ASBA Application
/ Bid
Eligible NRI
Equity Shares
Escrow Account
Escrow Agreement
Escrow Collection Bank(S)
FII
Fiscal
First Bidder
Floor Price
FVCIs
Registrar to the Issue and the Stock Exchange(s) and a list of
which is available at www.sebi.gov.in
A body corporate registered with SEBI under the SEBI
(Depositories and Participants) Regulations, 1996, as amended from
time to time
NSDL and CDSL
Depositories Act, 1996 as amended from time to time
Branch offices of the SCSBs which the respective SCSB has
identified as a designated branch at which the physical ASBA Form
can be submitted by an ASBA Investor.
The date on which funds are transferred from the Escrow Account of
our Company to the Public Issue Account after the Red Herring
Prospectus is filed with the RoC, following which the Board of
Directors shall allot Equity Shares to successful bidders
Directors of C. Mahendra Infojewels Ltd., unless otherwise specified are:
BSE (Bombay Stock Exchange)
The Draft Red Herring Prospectus dated [•], 2011, which does not have
complete particulars on the price at which the Equity Shares are offered
and size of the Issue, which was filed with the SEBI and Stock
Exchanges. It will become a Red Herring Prospectus issued in
accordance with the provisions of Section 60B of the Companies Act
after filing with the RoC at least three days before the opening of the
Issue. It will become a Red Herring Prospectus after filing with the RoC
after determination of the Issue Price
Submission of ASBA Bid-cum-Application Form electronically, by an
ASBA Investor, through the internet banking facility offered by the
SCSBs
NRIs from such jurisdiction outside India where it is not unlawful for
our Company to make this Issue or an invitation under this Issue
and in relation to whom the D r a f t Red Herring Prospectus
constitutes an invitation to subscribe to the Equity Shares offered
herein.
Equity shares of our Company of face value of ` 10 each unless
otherwise specified in the context thereof
An Account opened with Escrow Collection Bank(s) and in whose
favour the Bidder will issue cheques or drafts in respect of the Bid
Amount when submitting a Bid
Agreement entered into amongst our Company, the Registrar to this
Issue, the Escrow Collection Banks, the Lead Manager and the
Syndicate Member(s) in relation to the collection of the Bid Amounts
and dispatch of the refunds (if any) of the amounts collected, to the
Bidders
The Banks, which are clearing members and registered with SEBI as
Bankers to the issue at which escrow account will be opened,in this
issue comprising(.)
Foreign Institutional Investors and sub-accounts, as defined under the
FII Regulations and registered with the SEBI under applicable laws in
India
Period of twelve months ended 31March of that particular year, unless
otherwise stated.
The Bidder whose name appears first in the Bid-cum-Application Form
or Revision Form
The lower end of the Price Band, below which the Issue Price will not
be finalized and below which no Bids will be accepted in this case
being ` [•]
Foreign Venture Capital Investor as defined and registered with SEBI
7
GIR Number
Indian National
Industrial Policy
IPO Grading Agency
Issue
Issue Agreement
Issue Management Team
Issue Price
Issue Period
Issue Proceeds
Issue Account
Mutual Funds
Margin Amount
Memorandum/
Memorandum of
Association
Mutual Fund Portion
Net Issue
Net Issue Proceeds
Non Institutional Bidders
Non-Residents
NRI/ Non-Resident Indian
Non Institutional Portion
Overseas Corporate Body
under SEBI Regulations 2000(Amended).
General Index Registration Number
As Used in context of the Employee Reservation Portion, a citizen of
India as defined under Indian Citizenship act 1955 as amended, who is
not an NRI.
The industrial policy and guidelines issued there under by the ministry of
industry, Government of India, time to time.
[], the credit rating agency appointed by our Company for grading this
Issue.
Public issue of 1,30,00,000 equity shares of ` 10/- each of the
Company for cash at a price of ` [] per equity share (including a share
premium of ` [] per equity share) aggregating to ` [] Crores (the
‘Issue’)
The agreement dated March 27, 2012 between the Company and the
BRLM, pursuant to which certain arrangements are agreed to in relation
to the Issue.
The team managing this Issue as set out in the chapter titled
‘General Information’ in the Draft Red Herring Prospectus
The final price at which Equity Shares will be issued and allotted in term
of the Red Herring Prospectus. The Issue Price will be decided by
our Company in consultation with the Book Running Lead Manager on
the Pricing Date
The Issue period shall be [], 2012 being the Bid/Issue Opening date,
to [], 2012 being the Bid/Issue Closing date
The proceeds of the Issue that will be available to our Company being
upto ` [] Crores.
Account opened with merchant Banker(s) to the issue to receive monies
from the escrow account for the issue on the designated date.
Mutual funds registered with SEBI under the SEBI (Mutual Funds)
Regulations, 1996, as amended from time to time
The amount paid by the Bidder at the time of submission of the Bid,
which may be 10% or 100% of the Bid Amount, as applicable.
The memorandum of association of the Company, as amended from
time
to time.
That portion of the Issue, being 5% of the QIB portion (assuming that
the QIB portion is at least 50% of the Net Issue to Public available for
allocation on a proportionate basis.
The Issue is being 1,30,00,000 Equity Shares.
The Issue Proceeds less the Issue expenses.
All Bidders that are not Qualified Institutional Buyers or Retail
Individual Bidders and who have Bid for Equity Shares for an
amount more than ` 2,00,000/-.
All eligible Bidders, including Eligible NRIs, FIIs registered with SEBI
and FVCIs registered with SEBI, who are not persons resident in India.
A person resident outside India, as defined under FEMA and who is a
citizen of India or a person of Indian origin, each such term as defined
under the Foreign Exchange Management (Transfer or Issue of Security
by a Person Resident Outside India) Regulations, 2000, as amended.
The portion of this Issue being at least 15% of the Net Issue
consisting of 19,50,000 Equity Shares of ` 10/- each aggregating ` []
Crores, available for allocation to Non Institutional Bidders
A company, partnership, society or other corporate body owned
directly or indirectly to the extent of at least 60% by NRIs including
overseas trusts, in which not less than 60% of beneficial interest is
8
Pay-in Date
Pay – in – Period
Physical ASBA Application /
Bid
Price Band
Prospectus
Pricing Date
Public Issue Account
Payment Through Electronic
Transfer of Payments
Qualified Institutional buyers
/ QIBs
irrevocably held by NRIs directly or indirectly and which was in
existence on October 03, 2003 and immediately before such date had
taken benefits under the general permission granted to Overseas
Corporate Bodies under the FEMA. Overseas Corporate Bodies are not
permitted to invest in this Issue.
Bid/Issue Closing Date or the last date specified in the CAN sent to
Bidders receiving allocation who pay less than 100% Margin Amount at
the time of bidding.
This term means (i) with respect to Bidders whose Margin Amount is
100% of the Bid Amount, the period commencing on the Bid/ Issue
Opening Date and extending until the Bid/Issue Closing Date, (ii) with
respect to Bidders whose Margin Amount is less than 100% of the
Bid Amount, the period commencing on the Bid/Issue Opening Date
and extending until the closure of the Pay- in Date as specified in the
CAN.
ASBA Bid-cum-Application Forms submitted by an ASBA Investor
physically with the designated branches of the SCSBs.
Being the Price Band of a minimum price (Floor Price) of ` [] and the
maximum price (Cap Price) of` [] and includes revisions thereof. The
Price Band and the minimum Bid lot size for the Issue will be decided by
the Company in consultation with the BRLM and BRLM and advertised
by us in all editions of the national newspapers (one each in English and
Hindi) at least two days prior to the Bid/Issue Opening Date
The prospectus, filed with the RoC after pricing containing, inter alia, the
Issue Price that is determined at the end of the Book Building Process,
the size of the Issue and certain other information.
The date on which our Company in consultation with the BRLM &
BRLM will finalizes the Issue Price
Account opened with the Bankers to the Issue to receive money from the
Escrow Account for the Issue on the Designated Date.
Account opened with the Bankers to the Issue to receive monies from
the Escrow Account and accounts of ASBA Investors for this Issue on
the Designated date.
“Qualified Institutional Buyer” means:
(i) a mutual fund, venture capital fund and foreign venture capital
investor registered with the Board;
(ii) a foreign institutional investor and sub-account (other than a subaccount which is a foreign corporate or foreign individual), registered
with the Board;
(iii) a public financial institution as defined in section 4A of the
Companies Act, 1956;
(iv) a scheduled commercial bank;
(v) a multilateral and bilateral development financial institution; (vi) a
state industrial development corporation;
(vii) an insurance company registered with the Insurance
Regulatory and Development Authority;
(viii) a provident fund with minimum corpus of twenty five crore
rupees;
(ix) a pension fund with minimum corpus of twenty five crore
rupees;
(x) National Investment Fund set up by resolution no. F. No 2/3/2005DDII dated November 23, 2005 of the Government of India published in
the Gazette of India;
(xi) Insurance funds set up and managed by Army, Navy or Air
Force of the Union of India
(xii)Insurance funds set up and managed by the Department of Posts,
9
QIB Portion
Refund Account
Refund Bank
Resident Retail Individual
Investor /Resident Retail
Individual Bidder
Restated Financial
Statements
India.
Consists of at least 65,00,000 Equity Shares of ` 10/- each aggregating
` [] Crores at least 50% of the Net Issue (available for allocation to
QIBs on proportionate basis. 5% of the QIB Portion i.e. 3,25,000
Equity Shares shall be available for allocation on a proportionate basis
to Mutual Funds only.
The no-lien account maintained by the Refund Bank(s) to which the
surplus money shall be transferred on the Designated Date.
The bank(s) which have been appointed / designated for the
purpose of refunding the amount to investors (except ASBA
Investors) either through the electronic mode as prescribed by SEBI
and / or physical mode in accordance with the procedure contained
in the Chapter titled “Issue Procedure” beginning on page [] of the
Draft Red Herring Prospectus.
A Retail Individual Bidder who is a “person resident in India” (as
defined in Foreign Exchange Management Act, 1999)
The audited financial statements of the company prepared in
accordance with Indian Accounting Standards and the companies Act,
1956 and restated in accordance with the SEBI Regulations. The
Restated Financial Statements are included in this Draft Red Herring
Prospectus
Retail Portion
The portion of this Issue being not less than 35% of the Issue i.e.
45,50,000 Equity Shares of ` 10 each available for allocation to Retail
Individual Bidder(s).
Retail Individual Bidders
Individual Bidders (including HUFs and NRIs) who have Bid for Equity
Shares for an amount less than or equal to ` 2 lakh in any of the bidding
options in the Issue.
Revision Form
The form used by the Bidders to modify the quantity of Equity
Shares or the Bid Price in any of their Bid-cum-Application Forms or
any previous Revision Form(s)
Red Herring Prospectus/ RHP The Red Herring Prospectus to be issued in accordance with Section
60B of the Companies Act, which will not have complete particular of the
price at which the Equity Shares are offered and the size of the Issue.
The Red Herring Prospectus will be filed with the RoC at least three days
before the bid/ Issue Opening date and will become Red Herring
Prospectus after filing with the RoC after determination of the Issue Price
Registrar to the Issue or
In this case being Sharepro Services (India) Pvt. Ltd.
Registrar
SEBI MAPIN Regulations
The SEBI (Central Database of Market Participants) Regulations, 2003,
as amended from time to time.
Self Certified Syndicate Bank Self Certified Syndicate Bank (SCSB) is a Banker to an Issue
(SCSB)
registered under SEBI (Bankers to an Issue) account and a list of
which is available on http://www.sebi.gov.in Regulations, 1994 and
which offers the service of ASBA, including blocking of bank
Syndicate
Collectively, the BRLM and the Syndicate Member(s)
Syndicate Agreement
The agreement to be entered into between our Company, BRLM, and
the Syndicate member(s), in relation to the collection of Bids in this
Issue
Syndicate Member(s)
Intermediary appointed in respect of the Issue, registered with SEBI and
permitted to carry on activities as an underwriter,
Stock Exchange
BSE (Bombay Stock Exchange) and NSE (National Stock Exchange)
The slip or document issued by the Syndicate Member(s) to the
TRS or Transaction
Bidder as proof of registration of the Bid on the online system of BSE
Registration Slip
Underwriters
The BRLM, and the Syndicate Member(s)
10
U.S. GAAP
Underwriting Agreement
Underwriters
VCFs
Working Day
Generally accepted accounting principles in the United States of America
The Agreement among the Underwriters and our Company to be
entered into on or after the Pricing Date.
The BRLMs and the Syndicate Members.
Venture Capital Fund as defined and registered with SEBI under the
SEBI
All days other than Sunday or a public holiday (except during the Bidding
Period, where a Working Day means all days other than Saturday,
Sunday or a Public holiday), on which commercial banks in India are
open for business
11
PRESENTATION OF FINANCIAL INFORMATION AND MARKET DATA
Financial Data
Unless stated otherwise, the financial information used in the Prospectus derived from our financial
statements prepared in accordance with Indian GAAP, Companies Act and the SEBI Regulations
included elsewhere in this Prospectus. Our Financial Year commences on April 1 and ends on March 31
of the ensuing calendar year. Unless stated otherwise, references herein to a Financial Year (e.g.,
Financial Year 2010), are to the Financial Year ended March 31 of that particular year. In the Prospectus,
any discrepancies in any table between the total and the sum of the amounts listed are due to roundingoff.
There are significant differences between Indian GAAP and U.S. GAAP; accordingly, the degree to which
the Indian GAAP financial statements included in the Draft red herring prospectus will provide meaningful
information is entirely dependent on the reader’s level of familiarity with Indian accounting practices,
Indian GAAP, Companies Act and SEBI (ICDR) Regulations, 2009. Any reliance by persons not familiar
with Indian accounting practices on the financial disclosures presented in the Draft red herring prospectus
should accordingly be limited. Our Company has not attempted to explain these differences or quantify
their impact on the financial data included herein, and we urge you to consult your own advisors
regarding such differences and their impact on financial data.
The Company C. Mahendra InfoJewels Limited was formed in 2000 in the form of Partnership under the
name and style of C. Mahendra InfoJewels to carry on business of diamond Jewellery, gold, silver,
precious stone and studded jewellery. Our Business was converted from Partnership firm to Public
Company on 10.08.2010.
Market and Industry Data
Unless stated otherwise, industry data used throughout the Draft red herring prospectus has been
obtained or derived from industry publications and/or publicly available government documents. Industry
publications or publicly available government documents generally state that the information contained
therein has been obtained from sources believed to be reliable but that their accuracy and completeness
are not guaranteed and their reliability cannot be assured. Accordingly, no investment decisions should
be made based on such information. Although our Company believes that industry data used in the Draft
red herring prospectus is reliable, it has not been verified by us or any other person connected with the
Issue.
Currency of Presentation
All references to “Rupees” or “Rs.” or “``” are to Indian Rupees, the official currency of the Republic of
India. All references to “US$” or “US Dollars” are to United States Dollars, the official currency of the
United States of America.
12
FORWARD LOOKING STATEMENTS
We have included statements in this Draft Red Herring Prospectus which contain words or phrases such
as “will”, “aim”, “is likely to result”, “believe”, “expect”, “will continue”, “anticipate”, “estimate”, “intend”,
“plan”, “contemplate”, “seek to”, “future”, “objective”, “should”, “will pursue” “propose” and similar
expressions or variations of such expressions, that are “forward-looking statements”.
All forward looking statements are subject to risks, uncertainties and assumptions about us that could
cause actual results to differ materially from those contemplated by the relevant forward-looking
statement. Important factors that could cause actual results to differ materially from our expectations
include but are not limited to:
x
x
x
x
x
x
x
x
x
x
General economic and business conditions or Political instability in India.
The ability to manage our growth and integrate our operations;
Increasing competition in the diamonds and jewellery manufacturing;
Consumer tastes and preferences for diamonds and fine jewellery;
Changes in the Indian and international interest rates.
Fluctuation in Diamond / Gold prices.
Intense competition from existing and new entities may adversely affect our revenues and
profitability.
Our failure to expand our operations whether through Branches or otherwise:
Our ability to successfully implement our growth strategy and expansion plans or response to
technological changes.
The occurrence of natural or man-made disasters could adversely affect our results of operations
and financial condition.
For a further discussion of factors that could cause our actual results to differ, please refer Section titled
“Risk Factors” beginning on page 14 of this Draft Red Herring Prospectus, and Chapters titled “Business
Overview” and “Management’s Discussion and Analysis of Financial Condition” beginning on pages 87
and 155, respectively of the Draft Red Herring Prospectus. By their nature, certain market risk disclosures
are only estimates and could be materially different from what actually occurs in the future. As a result,
actual future gains or losses could materially differ from those that have been estimated. Neither our
Company nor the BRLM, nor any of their respective affiliates have any obligation to update or otherwise
revise any statements reflecting circumstances arising after the date hereof or to reflect the occurrence of
underlying events, even if the underlying assumptions do not come to fruition. In accordance with SEBI
requirements, our Company and the BRLM will ensure that investors in India are informed of material
developments until the time of grant of listing and trading permissions by the Stock Exchanges.
13
SECTION II - RISK FACTORS
An investment in Equity Shares involves a high degree of risk. You should carefully consider all
information in this Draft Red Herring Prospectus, including the risks and uncertainties described below,
before making an investment in Our Equity Shares.
To obtain a complete understanding of our Company, you should read this section in conjunction with the
chapter titled “summary of Business” beginning on page 27, chapter titled “Financial Information”
beginning on page 126 and chapter titled “Management’s Discussion and Analysis of Financial Condition”
beginning on page 155 as well as the other financial and statistical information contained in this Draft Red
Herring Prospectus.
You should also pay particular attention to the fact that we are governed in India by a legal and regulatory
environment which in some material respects may be different from that which prevails in other countries.
The risks and uncertainties described below are not the only risks that the Company currently faces.
The Draft Red Herring Prospectus contains forward looking statements that involve risks and
uncertainties also additional risks and uncertainties not presently known to the Company or that the
Company currently believes to be immaterial may also have an adverse effect on the Company’s
business, results of operations and financial condition and could cause the trading price of our Equity
Shares to decline and you may lose all or part of our investment. The financial and other implications of
material impact of risks concerned, wherever quantifiable, have been disclosed in the risk factors
mentioned below. There are, however, a few risk factors where the impact is not quantifiable and hence
the impact has not been disclosed in such risk factors. Unless otherwise stated in the relevant risk factors
set forth below, we are not in a position to specify or quantify the financial or other risks mentioned herein.
Materiality
The Risk Factors shall be determined on the basis of their materiality. In determining the materiality of risk
Factors, the following shall be considered:
1. Some risks may not be material individually but may be material when considered collectively.
2. Some risks may have an impact which is qualitative though not quantitative.
3. Some risk may not be material at present but may have a material impact in the future.
Risks Related to our company, Business and Industry
1.
Our Company ,our Promoter/Director and group companies are involved in various legal
proceedings , which if determined against us, could adversely affect our business and
financial condition.
Our company, promoters and directos are involved in certain legal proceedings and claims relating
to taxation matters. These legal proceedings are pending at different levels before varios courts,
revenue minister.No assurances can be given as to whether these matters will be settled in our
favour or against us. A summary of the pending proceedings is set forth below:
Sr.
No.
Particulars
No. of
cases /
disputes
LITIGATION BY AND AGAINST OUR COMPANY
Litigations filed against our Company
14
(` In crores)
Amount involved
where
quantifiable
1.
Notice u/s 138 of Negotiable Instrument Act against
our company
2.
Notice for recovery of amount against our Company
3
Demand under Income Tax
Litigations against our Directors/promoters
1.
Notice u/s 138 of Negotiable Instrument Act against
our directors and promoters.
2.
Notice for recovery of amount against our directors
and promoters
3
Demand under Income Tax
Litigations by our Directors/promoters
1
Criminal Complaint filed under Indian penal Code
2
Appeal before Revenue Minister Government of
Maharashtra
3
Civil case filed in the court
Litigations Involving our Group Companies/ Entities
Litigations filed against our Group companies
1
Demand under Income Tax
2
Civil case filed in the court
Litigations filed by our Group companies
1
Civil case filed in the court
1
46.71
11
1
24.36
0.02
1*
46.71
11*
24.36
3
0.45
3
1
1
1
2
0.16
6
* The Notice u/s 138 of Negotiable Instrument act and notice for recovery are issued to the
company when it was partnership firm and the same notices are issued to all the partners, Shrikant
Parikh, Jesingbhai Parikh and Minal Industries Limited and also to Shrikant Parikh, Jesingbhai
Parikh and Amul Patel as the director of Minal industries Limited which was the partners in the
partnership firm.
For details of outstanding litigation involving the Company and the Directors, the Group Companies,
see “Legal & Other Regulatory Information” on page 164 of this Draft Red Herring Prospectus.
2.
Our Funding requirements and the Deployment of Issue Proceeds are based on
management estimates and have not been subject to monitoring by any Independent
agency.
There will be NO Independent or a Monitoring Agency which would monitor the deployment of Issue
Proceeds and have not been appraised by any bank or Financial Institution. All the figures included
under the section titled, “Objects of the Issue” on page no. 53 are based on our own estimates. As
the net proceeds of the Issue will be less than ` 50,000 Lacs, under sub-regulation (1) Regulation
16 of SEBI (ICDR) Regulations, 2009 our Company is not required to appoint a monitoring agency
in relation to the Issue. However, as per Clause 49 of Listing Agreement to be entered into with the
Stock Exchanges upon listing of the Equity Shares and the Corporate Governance requirements,
the Audit Committee of our Company, would be Monitoring the utilization of the proceeds of the
Issue.
Further we cannot assure that the actual costs or schedule of implementation of the proposed
Objects will not vary from the estimated costs or schedule of implementation, and such variance
may be on account or one or more factors, some of which may be beyond our control.
3.
Our Company had negative cash flow in the recent financial years.
We had negative cash flows from in investing activities and financing activities from March 31, 2007
to September 30,2011 on account of utilstion of operating cash flow for investment in capital
15
expenditure, reducing the borrowings and withdrwal of capital by partners when the company was
partnership firm.
Particulars
Net
cash
from /(used
in) Investing
Activities
Net
cash
from /(used
in) Financing
Activities
Septemb
er
30,
2011
March
31, 2011
(0.08)
(0.26)
(3.81)
2.72
August
9,
2010
March
31, 2008
(` In crores)
March
31, 2007
March
31, 2010
March
31, 2009
(0.08)
(0.10)
(0.01)
(0.59)
(0.29)
(0.27)
(5.62)
(7.90)
(73.63)
(217.74)
For further details, please refer to the section titled “Financial Information” on page no. 126 of this
Draft Red Herring Prospectus.
4.
Some of Our group Companies have incurred losses in the last three years.
Our group companies have incurred losses during the last three years, details of which are set forth
in the table below (as per their respective audited financial statements):
(Amount in ` )
Name of Our Group Company
For the year ended March, 31
2011
2010
2009
Affinity investments Pvt. Ltd.
(11,146)
(1,60,579)
(24,230)
Click Metro Online Pvt. Ltd.
(9,770)
(40069)
C. Mahendra Jewels Pvt. Ltd.
(2485498)
(13367265)
Minal Exim Pvt. Ltd.
(13,711)
(7,000)
(8350)
Minal Infracons Pvt. Ltd.
(28,560)
(2,32,100)
(24480)
Minal Infrastructure Pvt. Ltd.
(19,560)
(1,63,048)
(23,230)
Minal Lifestyle Pvt. Ltd.
(19855)
(7000)
(8350)
Partnership Firm
Minal Plastic Products
(91368)
(10792)
-
5.
Our manufacturing process is undertaken at SEEPZ and we are yet to receive the approval
for the transfer of the sub lease of super structure into Company’s name and failure to
receive the approval shall adversely affect our business and results of operations.
The super structure admeasuring 4393.30 Sq.Mts was assigned by C. Mahendra Exports on the
plot of land which was originally sub leased in favour of Su-raj Diamonds by SEEPZ-SEZ authority.
If the decision is against Our Company for approval of sub lease of land and superstructure , we
shall have to vacate the said premises which may affect our business operations.
6.
We are dependent on United States,, who contribute to our total revenues. The total slaes of
the company is confined to not more than 10 clients. In the event of loss of any of these
clients may adversely affect our revenues, profitability and business operations.
One of Our major client i.e Selection Inc. and other few clients contribute to the total revenues of
Our Company are based in united states. The contribution for the last two years and for the period
ended on September 30, 2011 based on the restated financial statements are as below:
16
Customer 31.03.09
Top
Customer
Top 5
Customer
3005.46
4140.47
% of 31.03.10
total
Sales
72.58 1056.38
100.
00
2527.01
6759.93
%
of
total
Sales
42.03
(` in crores)
30.09.11 %
of
total
Sales
5218.80 73.73
16083.16
100.00
7077.90
% of total
Sales
31.03.11
41.80
100.00
100.00
Although we have expanded into newer markets, US continues to contribute significantly to our
revenues and results from operations. In the event, if we are unable to maintain and/or further
develop a continuing relationship with our customers or of loss of any significant customer may
have material adverse effect on our Business.
7.
The Registered Office is owned by Minal Plastic Products (Partnership Firm of Our Group)
and has been taken on lease for a period of 3 years commencing on 1.10.2011 till 30.09.2014
for ` 1000 per month.
The Registered Office of our Company situated at 214/A, Paradise Complex, Sayajigunj,
VAdodara-390 005 is owned by Minal Plastic Products (Partnership Firm of Our Group). Our
Company is permitted to occupy and use these premises for a consideration of ` 1000/- per month.
The lease is for a period of 3 years commencing 1.10.2011 till 30.09.2014. In the event Minal
Plastic Products revokes the Agreement or change the terms and conditions which are not
favorable to us or if Our Company fails to renew the tenancy agreement, we may suffer disruption
in our operations.
8.
Our Company has not followed Accounting Standard – 2 regarding “Valuation of
Inventories” The Institute of Chartered Accountants of India (I.C.A.I) and has not been
provided for in the Restated Financial Statements.
The Accounting Policy followed by us fro valuation of inventory is not in conformity with the
recommendations of AS- 2 prescribed by the I.C.A.I. On the basis of qualifications by the Auditor, it
has been noted that Our Company has not complied the same and also No adjustments has been
made to in the Restated Financial Statements.
9.
One of the Objects of the Issue is for the repayment of Unsecured loans aggregating to `
71.09 crores out of the Net proceeds. The outstanding capital of the partners at the time of
retirement of partners were converted in to unsecured loan .
We intend to utilize approximately 50.78 % of the Issue proceeds amounting to ` 71.09 crores
towards repaying certain unsecured loans to Our Erstwhile partners due to reconstitution of
partnership firm. These unsecured loans have been converted from capital to unsecured loan due
to reconstitution of partnership firm as on 20th May,2009 and converting capital of retiring partners
into unsecured loan, which we are required to pay them. We believe this repayment of debt which
was originally capital will help us to improve the debt equity ratio. For further details, please refer to
the section titled “Objects of the issue” on page no.53 of this Draft Red Herring Prospectus.If there
is any failure or delay to raise the funds through this Issue would impede our growth as Our
Company did not identify any other source for funding the same.
10.
Our Company has in the past entered into related party transactions and may continue to do
so in the future, which may involve conflict of interest.
For the financial period ended September 30, 2011, March 31, 2011 and August 9, 2010 Our
Company has entered into Related Party transactions the nature of which is as follows:
17
Nature of transactions
Sale of Diamond Jewellery
Sale of cut and polished
diamond
Purchase of gold and gold
findings
Purchase
of
polished
diamond
Purchase of silver and
silver findings
Purchase of platinum
(` in Crores)
For the period
ended
on
August 9,2010
4.22
For the period ended
on
September 30
,2011
4.56
For
the
period
ended on March
31, 2011
5.05
2.39
6.43
7.99
1.35
5.48
7.16
0.32
0.03
0.02
0.02
Furthermore, it is likely that we will enter into related party transactions in the future. There can be
no assurance that such transactions, individually or in the aggregate, will not have an adverse
effect on our business, financial condition and results of operations.
11.
We avail Working capital Loans for Our operations which stands as at February 29, 2012 to `
6.42 crores and if we are unable to maintain sufficient cash flow, credit facilities and other
sources of funding, in a timely manner or at all to meet Our working capital requirement,
could adversely affect our operations.
Our business requires significant amount of Working capital to finance the purchase of rough
diamonds and other raw materials. We cannot assure that going forward, we will be able to arrange
funds at a competitive rate and/ or Inability of Our Company to raise corresponding working capital
in line with growth of our operations may result in adversely affecting out operations and financial
performance.
12.
Our Insurance Coverage may not be adequate enough to protect us against certain
operating hazards of potential losses which may have adverse effect on Our Business.
We have maintained the following Insurance Policies:
Insurer
Name and nature
Risks covered
National
Insurance
Company Limited
The Oriental
Insurance
Company Limited
Standard Fire and
Special Perils Policy
Factory
Building,
plant
and
machinery ,Spare parts and Tools
and Electric Installation
Stock and stock in trade of
Jewellery,Gold, or Silver ornaments
, plate pearls and precious stones,
cash and currency notes.
Jewellers Block
Insurance Policy
Total sum
Insured
Total Sum
Insured: `
18.71 crores
Total Sum
Insured: `
25.00 crores.
There can be no assurance that the insurance maintained would reasonably cover all normal risks
associated with the operation of our business and any claim made will be honored fully, in part or
on time. Also, there are many events that could significantly impact our operations, or expose us to
third – party liabilities, for which we may not be adequately insured. For further details, please refer
to the section titled “Insurance” under “Business Overview” on page no. 87 of this Draft Red Herring
Prospectus.
13.
Our units are established in SEEPZ SEZ and Surat Special Economic Zone, Sachin and as
per the SEZ Rules ,2006 the company has to achieve positive net foreign exchange earning
as prescribed in the Special Economic Zone Rules, 2006.
18
As under the Special Economic Zone Rules, 2006, Our Company is required to export the
finished goods and has to achieve positive net foreign exchange earning as prescribed in the
Special Economic Zone Rules, 2006. If the unit has not achieved the positive net Foreign
Exchange Earning, the unit shall be liable for penal action under the provisions of the Foreign
Trade (Development and Regulation) Act, 1992.In the event of failure of this export obligation,
financial condition of Our Company would get adversely affected.
For further details please refer to chapter titled, “Government and Other Statutory Disclosures”
beginning on page 185 of the Draft Red Herring Prospectus.
14.
Our Company did not comply in past with the Statutory Compliance of Section 383A of the
Companies Act, 1956.
Our Company did not comply with Section 383A of the Companies Act, 1956 regarding the
appointment of Whole Time Company Secretary for the period of 17 months. However no action
has been initiated or taken by any statutory authority for the above non compliance. In an event of
such non-compliance may result in penalties or other action from the statutory authorities. Further,
our company has appointed Ms. Shradha Bhimani on 24th December 2011 as a full time Company
Secretary.
15.
Our Business is under the SEEPZ SEZ regulations and any change or renewal by the
Government may adversely affect our Jewellery Manufacturing & trading business.
Our primary Jewellery manufacturing facility is located in a SEEPZ SEZ in Mumbai, Maharashtra.
The other trading unit is located at Surat Special Economic Zone, Sachin and the facilities are
subject to tax exemption under section 10AA of the I. T Act. The tax benefits on this facility may
expire or may be terminated due to which our tax expense could materially increase, reducing our
profitability. Also, the possibility of withdrawal of the applicable benefits and concessions to a SEZ
in the future may adversely affect the attractiveness of a SEZ.
16.
Upon completion of the Issue, the Promoters Group & its Members will continue to retain
majority of our Equity Holding & also the Promoters & their Family members do occupy the
Key Positions in the Company & have significant control over us.
Our Promoters and members of the Promoter Group may influence the material policies of the
Company which may conflict with the interest of our shareholders as together with the members of
the Promoter Group, beneficially will hold 65.79 % of our post-issue paid up capital. Our Promoters
Group will have the ability to exercise significant influence over all matters requiring shareholders
approval, including the election of directors and approval of significant corporate transactions. The
control could delay, defer or prevent a change in control of the company, impede a merger,
consolidation, takeover or other business combination involving the Company, or discourage a
potential acquirer from making a tender offer or otherwise attempting to obtain control of the
Company even if it is in the Company’s best interest. The Promoters & Promoters Group may
influence the material policies of the Company or may have interests that are adverse to the
interests of our other shareholders.
17.
Our Company has not registered Trademarks under the Trade Marks Act and we may be
unable to adequately protect our Intellectual property which could harm our business and
may have lesser recourse to initiate legal proceedings to protect the brand.
Our inability to protect intellectual property rights may affect Company’s business. The Logo which
appears on the cover page of this offer document is not registered and shall have No or limited
legal protection. We have not registered Copyrights on our designs. If we are unable to sufficiently
protect our intellectual property, our competitors may produce and sell products under trademarks/
labels/ logo similar to the products offered by us, which may adversely affect the equity of our
19
trademarks. Further our designs/ trademarks/ products etc. don’t follow the same laws of protection
of intellectual property rights in other jurisdictions (foreign countries) or may infringe on the
intellectual property rights of third parties, which may expose us to legal proceedings.
18.
Promoters or the entities forming part of Our Group Companies or Entities in which our
Directors are interested are in the similar line of business. There may be possible conflicts
of interest between them.
The Group Companies namely C. Mahendra Jewels Private Limited, Minal Exim Pvt. Ltd. and
promoter company Minal Industries Limited have the main object which entitles them to carry out
similar line of business and Our Promoters are actively involved in the management of businesses
of these companies. There does exist a non- compete clause / agreement to carry on common
business objectives but we have had, and will continue to have, business transactions with these
companies, which in case may result in a potential conflict of interest. There can be no assurance
that these or other conflicts of interest will be resolved in an impartial manner can adversely affect
the business interest of our Company.
19.
In the event of loss of services of our Managing Director, Key Management Personnel’s or
Senior Management can adversely affect the success, profitability and results of operations
of Our Company significantly.
The growth of our business is highly dependent upon performance and the continued services of
our Management Team for managing Our Business. Mr. Shrikant Parekh, Managing Director has
more than 20 years of experience in the Jewellery sector is largely responsible for the growth of our
Business. Our Business model is reliant on the initiatives of our Senior Management & KMP’s.
The Loss of service of the Promoters, Directors, KMP’s or Senior Management could seriously
impair the ability to continue to manage and expand the business efficiently. Although we provide
constant development opportunities to meet the challenge of employee attrition among our
Professionals, we cannot assure for their continued services or to replace them in the event of their
leaving us.
20.
Setting up of Gold refinery facility and commencement of operation of the same may be
contingent upon obtaining of certain approvals and orders for the Machinery & Equipment
required have not been placed.
One of the Object of the Issue to set up of Gold refinery unit at Plot No 16(P), 17,28 & 29(P)
SEEPZ-SEZ, Andheri (E) , Mumbai We have applied for LOP to SEEPZ SEZ authority. we may
require to obtain certain approvals and permission from Pollution control board to commence our
operations.
Also, the proposed facility we require Machineries & Equipments for which we have not yet placed
the orders or yet to enter into definitive agreements. The total cost of is estimated to be ` 3.60
crores. We are subject to risks on account of inflation in the price of Machineries or for its import.
Our Company have obtained quotations from vendors and negotiations have commenced but since
the funding is from the IPO Proceeds and for minor components relied on management estimates,
any delay in access to IPO Proceeds would eventually delay the process of placing the orders for
the remaining Machineries.
21.
In the event there is delay in the completion of the Issue, we have not identified any alternate
source of financing the ‘Objects of the Issue’. If we fail to mobilize resources as per our
plans, it may impede our future growth.
Substantial part of the Issue proceeds is towards the repayment of the Unsecured Loans. We have
not identified any alternate source of funding and hence any failure or delay on our part to raise
20
money from this Issue or any shortfall in the Issue proceeds may delay the growth plans of Our
Company.
22.
There are certain Contingent liabilities amounting to ` 147.74 crores which have not been
provided for, if it materializes, could adversely affect our financial condition and results of
operations.
As on September 30th, 2011 our contingent liabilities not provided for as per our Restated Financial
Statements aggregated to ` 147.74 crores in the event the Company is called upon to pay such
liabilities, the financial position and results of operations could be adversely affected.
(` in crores.)
Particulars
Bond cum Undertaking given by the Company to the President of India
towards manufactue of goods for Exports in Special Economic Zone
Total
Amount
147.74
147.74
For further details on the nature of contingent liabilities, please see “Financial Information”,
Annexure on page 128 of this offer document.
23.
Our Company cannot assure to pay dividends to our shareholders in the future as the ability
depends upon future earnings, financial conditions, cash flows, working capital
requirements and capital expenditures.
There can be no assurance that we will be able to pay dividend in the future as the amount of our
future dividend payments, if any, will depend upon our future earnings, financial conditions, cash
flows, working capital requirements and capital expenditures. The declaration and payment of any
dividends in the future will be recommended by our Board of Directors, in its discretion and will
depend upon various factors.
24.
The Restrictive covenants/ conditions imposed by our financing arrangements which we
have entered into with our lending banks for our credit facilities, may adversely affect our
business operations.
The loans taken by our Company from our lending banks have certain Restrictive Covenants
attached to it. For the details of the Restrictive Covenants kindly refer to the section titled “Financial
Information ”in th sub section ‘Finacial Indebteness’ on page 161 of this DRHP.
25.
Any adverse fluctuations in raw material prices for our manufacturing processes may have a
material adverse effect on our profit margins.
Any increase in the prices /cost of the raw materials will significantly increase the cost of production
for Our Company for which we would be unable to increase our product prices to offset the increase
in raw materials costs and may not be able to pass on the additional costs of materials to our
customers at all points of time, which could adversely affect our profitability and results of
operations.
26.
Our Business operates in highly competitive environment.
CMIL faces competition not only from large players but also from innumerable small players
operating domestically or international in the unorganized sector. Some of our competitors have
well established brand names under their fold and may have greater financial resources, technical
and marketing resources and generate greater revenues and therefore may be able to respond
better to market changes than we can. We face pressure from our larger competitors, which may be
21
better able to offer a broader range of complementary products and services and to the extent of
our competitor’s responsiveness to clients needs.
We expect that competition will continue and we cannot have control over the price, quality, and
consistency in meeting customer requirements, preferences in favour of other luxury products or to
retain highly skilled technical employees against which our competitors may offer them. There can
be No assurance that we will be able to compete effectively and any failure to do so may reduce the
prices of our products, adversely affecting the revenues and Business operations of the Company.
27.
Exchange rates fluctuation between Indian Rupees and United States Dollar may have an
adverse effect on results of operations.
The earnings of our Company originated at US and US Dollar is the only currency with which all the
transactions are carried out. The exchange rate between Rupee and US Dollar has been volatile
substantially in recent years and may fluctuate in the future. We may incur profit/ loss due to foreign
exchange differences arising on the settlement of past or future contracts. Also cannot assure that
we will be able to effectively mitigate the adverse impact of currency fluctuations on the results of
operations.
28.
Our Company is required to renew or maintain certain statutory and regulatory permits and
licenses in the ordinary course of business, in the event of failure to renew them in a timely
manner or any delay or inability to obtain the same may have a material adverse effect on
our Business and results of operations.
Certain applicable statutory and regulatory permits and licenses or registrations are required to
operate the business. There can be no assurance that the relevant authorities will issue such
permits or approvals in the timeframe anticipated by us or at all. Failure by us to renew, maintain or
obtain the same at the requisite time may result in the interruption of our operations and may have
an adverse effect on Our Business.
For further details please refer to chapter titled, “Government and other Statutory Disclosures”
beginning on page 185 of the Draft Red Herring Prospectus.
22
Prominent Notes
1. Based on our restated financial statements, the net asset value per equity share having a face value
of ` 10 each was ` 17.45 per share as of September 30, 2011 and ` 13.62 per share as of March 31,
2011.
2. Public Issue of 1, 30, 00,000 Equity Shares of ` 10 each for cash at a price of ` [] per Equity Share
(including a share premium of ` [] per Equity Share) aggregating upto ` [] Crores.
3. Our Company’s net worth as per the restated financial statement as at September 30, 2011 was `
43.61 Crores and as on March 31, 2011 was ` 34.04 Crores.
4. The average cost of acquisition of equity shares by each of our Promoters, is as set out below
Name of the promoters
Shri Jeshingbhai B
Parikh
Shri Shrikant Parikh
Minal industries limited
C Mahendra Jewels
Private Limited
1.
Number of equity share
1,87,500
Cost of acquisition (Amt in `)
10.00
1,22,75,000
42,25,000
81,25,000
10.00
10.00
10.00
For further details, see “Capital Structure - Details of Build Up, Contribution and Lock in of
Promoters” on page 44 of this Draft Red Herring Prospectus.
5. The Promoters, Directors and key managerial personnel are interested in the Company to the extent
of remuneration and the Equity Shares held by them or their relatives and associates or held by the
companies, firms and trusts in which they are interested as directors, member, partner and/or trustee
and to the extent of the benefits arising out of such shareholding, if any, in the Company. For further
details, see “Capital Structure”, “Our Promoters and Their Background” and “Our Management” on
pages 43,116 and 103, respectively.
6. At present, except C. Mahendra Jewels Pvt. Ltd., Minal Industires Ltd. & Minal Exim Private Ltd, none
of our group companies carry on activities, which conflict with our business. For more details, please
refer “Common Pursuits” on page 120 of this DRHP.
7. For details of the transactions between our Company and our Group Companies please refer chapter
titled “Auditors Report on Restated Financial Information - Related Party Transactions” on page no.
124 of this DRHP.
8. For any clarification or information relating to the Issue shall be made available by the BRLM and our
Company to investors at large and no selective or additional information will be available for any
subset of investors in any manner whatsoever. The investors may contact BRLM for any complaint
pertaining to the Issue.
9. For details of the transactions between our Company and our Group Companies please refer section
titled “Financial Information - Related Party Transactions” on page no. 124 of this DRHP.
23
SECTION - III
SUMMARY OF INDUSTRY
Disclaimer of IMaCS: All information contained in the enclosed content has been obtained by IMaCS
from sources believed by it to be accurate and reliable. Although reasonable care has been taken to
ensure that the information herein is true, such information is provided is true „as is̏ without any warranty
of any kind, and IMaCS in particular, makes no representation of warranty, express or implied, as to the
accuracy timeliness or completeness of any such information. All information contained herein must be
construed solely as statements of opinion and IMaCS shall not be liable for any losses incurred by users
from any use of this publication or its contents.
Overview of Indian Economy
Over the last five years, the Indian Economy has experienced significant growth with an average GDP
growth of close to 8.5% (2007-2011). In the financial year 2011 (FY2011), the Indian economy recovered
from the slowdown in FY2009. The annual Gross Domestic Product (GDP) growth was 8.5% in FY2011
as compared with 6.8% in FY2009. However, GDP growth rate started to decline after Q2FY2011 and
was 6.8% in Q2FY2012 as compared to 8.87% in Q2FY2011.
Contribution of Gems and Jewellery Sector to Indian Economy
Gems and jewellery is the leading sector, contributing to foreign exchange earnings. In FY2011, the total
exports from this sector were estimated at US$ 43,139.24 million accounting for 16.67% of the country’s
total exports.
Overview of Global Gems and Jewellery Industry
Gems and jewellery sector is categorised under three subsectors namely gemstones, jewellery and
pearls. In FY2011, the global demand was about 2,060 billion tonnes, with 17% growth over FY2010. The
Asian gold jewellery industry was valued at around US$ 150 billion in FY2011, growing at about 9%. The
Global gold industry was dominated by India and China, which together constituted 51% of global
demand for gold jewellery, gold bar and gold coin. Also, in FY2011, the gold jewellery demand decreased
in terms of volume in the US and UK by 14% each and Italy by 16%. However it increased in value terms:
US demand increased by 8%, UK by 10% and Italy by 12%. In countries such as South Korea, Indonesia,
Japan and Thailand the demand has shifted from 22/24-carat gold jewellery to 18-carat gold, gem
studded jewellery and branded silver jewellery.
Overview of Indian Gems and Jewellery Industry
The gems and jewellery industry has a very important role in the Indian economy. It is among the fastest
growing. In FY2011, the industry was estimated at approximately ` 480,000 crore (US$ 100 billion),
comprising exports as well as domestic consumption.
The industry is characterised by a highly unorganised sector with high working capital and export driven
operations. It also employs over 1.8 million people directly or indirectly. There are over 100,000 jewellery
manufacturing units and about 6,000 diamond processing units. The industry has also been declared as a
thrust sector by the Government of India.
The Indian Gems and Jewellery industry can be segmented into diamond, gold and costume jewellery. Of
these, gold and diamond jewellery are the two major segments. India exports 95% of the world’s
diamonds accounting for 70% of the world’s diamond trade.
In FY2011, the total exports from this sector were estimated at US$ 43,139.24 million growing at a
compound annual growth rate (CAGR) of 21.3% from 2002 to 2011. Primarily, gems and jewellery
exports takes place through units based in special economic zones (SEZ) and export promotion zones
(EPZ).
24
Products exported from India sector include cut and polished diamonds, gold jewellery, coloured
gemstones, pearls, synthetic stones, coins and non-gold jewellery. Each of these product exports grew
substantially in FY2011 with the total year-on-year growth in exports at 46.9%.
A predominant portion diamonds processed in India is exported in the form of either polished or finished
diamond jewellery. In FY2011, diamonds accounted for major portion of exports, contributing 65.5% and
followed by gold jewellery (29.8%), rough diamonds (2.51%) and coloured gemstones (0.72%).
Destination wise United Arab Emirates (UAE) is the major importer of gems and jewellery from India,
contributing 47% to the total exports. Hong Kong (22%) and United States of America (11%) are the other
leading importers from India. Other export destinations include Belgium, Israel, Singapore, Thailand,
Japan, United Kingdom (UK) and Australia.
India has limited natural resource in terms of raw materials. A large portion of rough diamonds, gold bars,
recycled gold bars, raw pearls, rough coloured stones and silver bars is imported. In FY2011, the total
imports in this sector were valued at US$ 41,130.29 million with a year-on-year growth rate of 47% over
FY2010.
Major portion of imports are of cut and polished diamonds, contributing to almost half of total imports.
Rough diamonds and gold bars are the other significant imports.
Emerging Trends and Key developments in the sector
India’s gems and jewellery industry is being strongly supported by increasing disposable income and
rising aspirations. Branded jewellery and international brands are also gaining importance. According to a
research by WGC, 75% of women in India are constantly searching for new designs.
The industry is highly unorganised with organised retail accounting for just 5% of total market. The
unorganised retail segment comprises, mainly, family jewellers. There are approximately 450,000
goldsmiths in India. With a number of organised jewellery retailers entering India, this segment is gaining
importance. Exposure to Internet, changing lifestyles and international travels has increased awareness
of branded jewellery.
Many Indian brands are also focusing on advertising to create customer awareness. They advertise
though television and newspaper advertisements and hoardings. A few major players also conduct
fashion shows and participate in trade fairs and exhibitions. These promotional shows and exhibitions
have emerged as a very comprehensive tool for showcasing the collections.
In order to increase the reach Indian players are entering into strategic alliances with a number of
international brands. Such alliances help the companies diversify their product portfolios and also expand
the customer base.
Historical growth and projections
The gems and jewellery sector is demand driven and has high seasonality. India’s culture and mythology
embrace gold and diamond jewellery. Indians purchase gold during annual festivals such as ‘Dhanteras’
and ‘Akshay Tritiya’. This has traditionally created a strong seasonal increase in sales.
The gold jewellery market has grown at a CAGR of 20.86% in the period FY2004-FY2011. The growth
was mainly because of high increase in gold prices (CAGR of 23.4% from FY2005-FY2011) backed by
support from the Government. In the three years to 2014-15, the gold jewellery market is likely to continue
to be influenced by these factors. By 2014-15, the domestic market is expected to grow to ` 253,067
crore.
The diamond jewellery market retail sales in India have grown at a CAGR of 19% in the period FY2004FY2011. Exports were valued at ` 12,798 crore in FY2011. The growth in diamond jewellery market was,
mainly, because of a combination of factors such as increase in prices of diamond and gold and increase
in demand for diamond jewellery. In the three years to FY2014-15, the diamond jewellery market is likely
25
to continue to be affected by these factors. By 2014-15, the retail sales are expected to grow to ` 37,099
crore and export to ` 19,038 crore.
Key Growth Drivers
The main drivers of the industry are highly skilled and low cost manpower along with strong Government
support. Globally, Indian jewellery is known of exquisite craftsmanship. The industry is also
technologically advanced along with a strong global supply chain. Growing household income and
changing consumer perceptions and preferences, increasing use of high-end technology, growing
number of gemological training institutes are also few factors affecting the growth.
In India, the average per-carat labour cost for cutting and polishing diamonds is much lower as compared
to rest of the world. There is a continuous traditional demand of jewellery in India, as jewellery is a very
important part in Indian culture. Any wedding in India is incomplete without jewellery and jewellery is the
preferred choice of gift by the near relatives to the bride and groom. Jewellery is also considered as a
very important saving and investment vehicle by Indians. The Government of India also provides strong
support to this sector by providing waiver in custom duties and establishing SEZ for the sector.
Key Challenges And Constraints
The industry also faces a number of challenges which include rise in gold prices, dependence on imports
for raw materials, emerging threats from other countries like China. Large presence of unorganized sector
is also a constraint faced by the sector.
High fluctuation in gold prices creates a negative impact in the mind of a consumer leading to decline in
sales. In the past five years, the gold prices have more than doubled affecting the consumers spending
pattern. Few people also try to delay their purchases due to high gold prices.
Although India currently enjoys dominance in the world’s cut and polished diamonds market, a few
countries like China and Africa posses threat to the country in long term. An increasing number of
diamond processors from Israel and Belgium, and even India, are setting up facilities in China. African
countries, which include Namibia, Botswana, Angola, and South Africa have sought to establish cutting
and polishing centres. These countries which have high availability of raw materials are considering on
imposing export duties on rough diamonds, which would raise costs for Indian processors.
Government Initiatives
The Government of India has taken many initiatives to boost the gems and jewellery industry as it is the
major foreign exchange earner for the country. These initiatives include establishing bodies to promote
trade, setting up special economic zones to increase investment in this sector, allowing 100% foreign
direct investment (FDI) through automatic route, allowing duty free imports of raw materials, which include
rough semi-precious stones, rough coloured precious gem stones rejected jewellery and polished
diamonds. The Government has also lowered the duty for importing platinum.
Government of India has established a number of government bodies in order to facilitate trade and
promote exports which include GJEPC and the Gems and Jewellery Trade Council of India (GJTCI).
The Government has also allowed 100% FDI, in this sector through automatic route. For exploration and
mining of diamonds and precious stones FDI is allowed up to 74% and for exploration and mining of gold
and silver and minerals other than diamonds and precious stones under the automatic route. The
Government annual initiatives are announced in the annual budget and foreign trade policies.
Competition Analysis
The Indian gems and jewellery market extremely fragmented and is largely dominated by the unorganized
players. But, organised players are gaining significance with branded and designer jewellery showing
tremendous growth potential. These players are focus on utilizing the high skilled labour and make
considerable improvements in their collections and services.
26
SUMMARY OF BUSINESS
Disclaimer: In this section, unless the context requires otherwise, any reference to “we”, “our” and “us”
refers to our Company and our group. Investors should note that this is only a summary and does not
contain all information that you should consider before investing in our Equity Shares. For risks related to
our business, our Company and our industry, see section titled “Risk Factors” on page 14
Overview
Our group is an integrated player, whose business can be divided into two operations namely,
manufacturing and exporting diamond studed Jewellery. The company C. Mahendra Infojewels Limited
was formed in 2000 in the form of Partnership under the name and style of C. Mahendra Infojewels to
carry on the business of diamond, jewellery, gold, silver, precious stones, studded jewellery and
development of software (and software exports) .by Shrikant Parikh with Mahendra Shah and Champak
Mehta. The company has started manufacturing of diamond studded jewellery in Seepz Mumbai in the
year 2000 under SEZ scheme for a period of ten years. The original permission in the year 2000 was
given by the office of the Development Commissioner in the name of C. Mahendra Exports and
subsequently the change in implementing agency from C. Mahendra Exports to C. Mahendra Infojewels
was approved by the Development commissioner in the year 2000. During the period from 2000-2010 ,
there were multiple changes in the constitution of partnership firm and at the time of conversion of
partnership firm into Limited company, Mr Shrikant Parikh was the original partner remain in partnership
firm. The Asst development Commissioner SEEPZ-SEZ has approved continuation of SEZ project for a
further period of five years for the period 2010-11 to 2014-15 with certain terms and conditions regarding
fulfillment of Export turnover of US $ 6,66,66,670 and net Foreign Exchange earnings of US $ 90,00,010.
The company had also obtained approval for establishment of Second unit of manufacturing Gold and
Silver Studded Jewellery at Plot No 16(P), 17, 28 & 29(P) SEEPZ-SEZ, Andheri (E), Mumbai. The
company has obtained approval for manufacturing Studded Jewelry with an installed capacity of 65,000
Pcs ( 250 Kgs) and Trading of Rough, Cut and Polished diamonds and Gemstones with an installed
capacity of 50,000, carats at Unit No 427,Plot No 250, Surat Special Economic Zone, Sachin, Surat in the
State of Gujarat
Currently Our Company is operating through 3 manufacturing units in which 2 are located in SEEPZ –
SEZ area and the third one at Surat Special Economic Zone. The Jewellery production facility is located
at Plot No 16(P), 17, 28 & 29(P), SEEPZ-SEZ, Andheri (East) Mumbai have good facilities for the
manufacturing of diamond studed gold & silver Jewellery. The credit for the success is we believe due to
our employees. Our senior management team consists of experienced individuals with diverse skills in
manufacturing, engineering, international business and finance
Also, the most important factor for the success of business and higher profit margin is selling tested
products directly to retailers and absence of middleman for sales activity. On account of direct selling to
retailers the company came to know about the change in the fashion trend of jewelry and accordingly
produce the new concept items. The company use CNC machines for making models as well as high end
Jewellery
Our Competitive Strength
x
Direct marketing to the chain stores
The company is selling the products through Selection Inc in USA. The direct marketing of the product to
the chain stores like Zales, Kim etc resulting into higher margin compared to other players in the industry.
The Marketing strategy of the company from manufacturer to retailer helps the company to know market
trend of the product, preference of customers and immediate feedback for new concepts in the jewellery.
x
Use of Modern technology and Quality standards
The main promoter Shrikant Parikh being an engineer has applied engineering knowledge for
27
manufacturing Jewelry. The company is using CNC machine technology for manufacturing Jewellery
against conventional method. The Company is using metal moulds, precise tools and modern CNC
machines for making models as well as jewellery.
x
Value added service tagging, padding & Bagging
The company is supplying goods to large stores and the company is providing value added service which
includes tagging, padding and bagging. The words indicate the packing of product in attractive and
beautiful manner for specialized dispatching. As the jewelry is by choice therefore packing and
presentation plays important role in International market.
x
Experienced management team and motivated employee
We have a highly experienced and qualified management team. Our MD is Shrikant Parikh having 20
years of experience of diamond studded Jewellery. The other directors of our Board comprises of persons
having rich experience in the engineering filed and administrative filed that gives diversified insights and
also help us in identifying new business avenues. This is backed by motivated and qualified staff that is
instrumental in our business growth. The policies are drafted by the top management and implemented
by the staff.
Business Strategy
x
Expand customer base
The company is selling the diamond studded Jewellery in U.S.A through marketing hand Selection Inc
among few retail chain stores. The company intends to open some new wholesale account in Atlanta
area as well as in Brazil, Panama etc. The company will reduce exposure to not more than 15 % to any
account in order to avoid trap of single account. The company would like to start promoting Jewellery
through E Commerce with extensive advertisement campaign.
x
Expand the geographical presence
The company is marketing the Diamond Studded jewellery in U.S.A. only. Recently the company has
started the trading of diamond and gold in the Arabian Countries. The company will start manufacturing
high end jewelry which is in demand in Arabian countries/UK.
x
Manufacturing High End Jewellery
At present the company is manufacturing popular jewellery under the brand CM99 and cm 199 i.e
Jewellery pricing ranging from $ 99 to $ 199. However the company in order to enter into Arabian
countries and U.K intends to manufacture high end Jewellery. The company will use better quality of
diamond and metal used will be 14 and 18 KT. Gold, platinum, titanium as well as stainless steel.
x
Internet marketing
As the IT and call center business is booming in India the company can take advantage of this
techniques. In India we have educated and trained work force in this area of working, which is easily
available in SEEPZ area where we have presence. The company will list fashion Jewellery on ebay
offering customers to bid or have a discounted deals. Such type of marketing under the b2C model will
help the company to reduce marketing overheads. The company will become global player in Jewellery
business.
x
Vertical Integration
Generation of precious metal scrap and recovery of the same is very important in Jewelry Business and it
does amount a lot. Effective Recovery of Precious Metal does add to profitability to the Jewelry Industry
28
considerably. Keeping this in mind we have decided to put up independently operating full scale Precious
Metal Refinery in SEEPZ.
Putting up Precious Metal Refining Plant will lead to buying of Diamond jewelry at effective rate and that
will land up in availability of good quality of Diamonds and Precious raw Metal in enough quantity for our
captive consumptions.
Weakness and Threat
x
x
x
x
The long credit period to the clients will block the funds of the company for longer period resulting into
lower turnover of the company
The Main promoter Shrikant Parikh is responsible for marketing, administration and production
The company has concentrated in USA Market and few customers only.
Fluctuating Precious Metal Prices calls for quick turn-around of Manufactured Jewelry Products into
final sell to avoid any ill-effect of ups and down of raw metal prices.
Our Business Operations
We manufacture diamond studded Jewellery using various metals like gold/silver/platinum/stainless steel.
Our operations include product designing, testing the same on various outlays, supplying the tested
products to retail chain stores based on orders received from customers and providing value added
service like tagging, padding & Bagging. Our product includes Ring, Pendant, Earring, Bracelet, Trio Ring
and set.
We are exporting the goods only in USA through marketing hand Selection inc. The sales of diamond
studded jewellery for the year ended on 31st March, 2011 was ` 34.00 crores . For the Half year ended on
30th September 2011 the company had sold Jewellery worth ` 18.59 crores.
The company has started trading of Diamond, Gold and Gold findings, and Silver and silver findings
activity from Surat in the month of March, 2010. The company had obtained the permission for trading of
50,000 carats of rough, cut and polished diamonds, gemstones from the unit established at Surat Special
Economic Zone.
Our Company has not entered into any collaboration and also has not entered into any agreement for
Performance guarantee or assistance for marketing by any collaborators.
Raw Material
The principal raw material used for manufacturing jewellery is cut and polished diamond, Gold and Silver.
The diamonds are purchased from Domestic market and from local suppliers. Gold and precious mental
is purchased from MMTC, SEEPZ Branch and Bank of India, SEEPZ branch. Silver is also purchased
from local market and foreign market.
Our Market:
The company is selling the product in U.S.A market only and out of total sales 60% is through retail chain
stores and 40% through mom and pops. Selection Inc. the marketing arm employ sales personnel who
provides the latest fashion trend in the Jewellery, approach the new clients and sale of product through
mom and pos. In the future the company intends to manufacture high end Jewellery and enter in to
Arabian Market, United Kingdom so as to reduce the dependence on U.S.A. market only.
29
SUMMARY OF FINANCIAL INFORMATION
The following summary of financial data has been prepared in accordance with Indian GAAP, the
Companies Act and the SEBI (ICDR) Regulations, 2009 and Restated as described in the Auditor’s
Report of our Statutory Auditor’s M/s. R.H.Modi & Co., Chartered Accountants March 02, 2012 in the
section titled ‘Financial Information’. You should read this financial data in conjunction with our financial
statements for each of Financial Years including the notes thereto and the report thereon, which appears
under the Section titled “Financial Information” and Chapter titled “Management’s Discussion and
Analysis of Financial Condition ” beginning on pages 126 and 155 of the Draft Red Herring Prospectus.
STATEMENT OF RESTATED ASSETS AND LIABILITIES
Particulars
I
FIXED ASSETS
NET BLOCK
As at 30Sep.11
As at 31Mar-11
As at 9Aug 10
As at 31Mar-10
As at 31Mar-09
4.44
4.66
4.63
4.83
5.48
(` In Crores)
As at 31As at
Mar-08
31Mar-07
6.25
7.09
Capital work-inprogress
including capital
advances
0.15
4.44
-
4.66
-
4.78
-
0.08
4.91
-
5.48
-
6.25
-
7.09
-
19.18
256.02
11.95
185.24
24.01
79.98
27.03
75.56
26.88
78.99
42.72
50.54
34.11
68.08
0.41
0.47
0.39
0.21
0.06
0.43
0.35
-
-
-
-
-
-
-
25.13
300.74
22.27
219.93
1.08
105.46
0.75
103.55
0.72
106.65
0.74
94.43
0.62
103.16
10.90
68.37
179.89
2.50
261.66
11.81
70.70
108.15
190.66
11.48
67.62
6.08
0.10
85.28
11.33
28.32
4.23
0.10
43.98
14.73
72.41
5.39
0.10
92.63
22.31
1.59
0.09
23.99
23.40
0.25
3.00
0.07
26.72
V
DEFERRED
TAX
LIABILITIES
(NET)
(0.09)
(0.11)
(0.04)
(0.04)
(0.05)
(0.04)
(0.04)
VI
NET WORTH
(I+II+III-IV-V)
43.61
34.04
25.00
64.52
19.55
76.73
83.57
II
INVESTMENTS
III
CURRENT
ASSETS,
LOANS AND
ADVANCES
Inventories
Sundry debtors
Cash and bank
balances
Other current
assets
Loans and
advances
IV
LIABILITIES
AND
PROVISIONS
Secured loans
Unsecured loans
Current liabilities
Provisions
30
Represented
by:
SHAREHOLDER
S FUND
Share Capital
Securities
premium account
Reserve and
Surplus
IX
NET WORTH
(VII+VIII)
25.00
25.00
64.52
19.55
76.73
83.58
-
-
-
-
-
-
18.62
9.04
-
-
-
-
43.61
34.04
64.52
19.55
76.73
83.57
25.00
25.00
STATEMENT OF RESTATED PROFIT AND LOSS
(` In Crores)
Particular
For the year/ Period end on
31-Mar9-Aug - 31-Mar11
10
10
30-Sep11
INCOME
Income from Manufacturing Items
Income from trading Items
Other income
Increase/ (Decrease) in inventories
EXPENDITURE
Cost of Raw material
Cost of traded Items
Staff cost
Manufacturing expenses
Selling & Distribution expenses
Interest
Miscellaneous expenditure written
off
Depreciation / Amortization
PROFIT BEFORE TAXATION
Provision for tax
Current tax
Less: MAT credit entitlement
Deferred tax
Fringe benefit tax
Net profit after tax
31-Mar09
31-Mar08
31-Mar
-07
18.59
52.19
7.82
78.60
26.62
124.27
150.89
7.38
2.56
1.40
(2.10)
9.24
22.26
3.01
0.05
2.10
27.42
19.25
22.18
14.24
55.67
35.69
77.61
35.69
0.18
77.79
11.11
51.94
1.24
13.18
119.95
2.06
7.13
0.80
9.23
3.07
1.53
36.08
1.51
24.47
2.87
51.68
3.93
1.22
0.06
0.57
5.34
0.10
0.70
0.88
0.04
0.30
9.79
0.01
1.01
1.57
0.17
1.45
7.87
0.38
2.28
7.84
0.48
2.29
0.05
0.30
66.49
0.21
0.38
141.92
0.01
0.21
9.37
0.68
25.32
0.78
41.56
0.90
38.77
1.00
67.22
12.11
(2.50)
(0.02)
9.59
8.97
0.07
9.04
(0.13)
2.10
(0.01)
(0.01)
2.08
14.11
14.11
(3.08)
(0.03)
(3.11)
10.57
0.03
(0.03)
10.57
(0.13)
STATEMENT OF RESTATED CASH FLOW
(` In Crores)
Particulars
As at
30-Sep2011
31-Mar
11
for the year ended
9-Aug - 31-Mar- 31-Mar10
10
09
CASH FLOW FROM
31
31-Mar08
31-Mar07
A.
B.
OPERATING
ACTIVITIES
Profit before
taxation
Adjustment for:
Depreciation /
Amortization
(Profit) / Loss on sale
of Investments (net)
Interest income
Interest expenses
Unrealised exchange
difference (net)
Dividend income
Profit /Loss on sale of
fixed assets
Miscellaneous
expenditure written
back
Provision for doubtful
debts and advances
(Net)
Cash generated
from operations
before working
capital changes
Adjustment for:
(Increase)/ Decrease
in inventories
(Increase)/ Decrease
in trade and other
receivables
Increase/ (Decrease)
in current liabilities
and provisions
Cash generated
from/ (used in)
operations
Direct tax paid (Net)
Net cash from/
(used in) Operating
Activities (A)
CASH FLOW FROM
INVESTING
ACTIVITIES
Payments made for
purchase of fixed
assets/ capital
expenditure
Proceeds from sale
of fixed assets
Loans (granted)/
received back (net)
Interest received
12.11
8.97
(0.13)
2.10
14.11
(3.08)
105.81
0.38
0.21
0.21
0.68
0.78
0.90
10.05
(0.01)
0.70
0.30
0.30
(.01)
1.01
1.45
(0.02)
2.28
(1.56)
22.89
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
13.18
9.48
0.38
3.78
16.34
0.08
137.19
(7.23)
12.06
3.02
(0.15)
15.85
(86.15)
92.65
(73.64)
(126.45)
(4.74)
3.40
(28.44)
174.33
8.48
74.24
101.97
1.85
(1.15)
3.79
(13.84)
(55.06)
6.55
(2.50)
(2.94)
-
0.51
-
5.88
-
7.54
-
74.42
(0.25)
183.26
(0.28)
4.05
(2.94)
0.51
5.87
7.54
74.17
182.98
(0.08)
(0.27)
(0.08)
(0.10)
(0.01)
(0.69)
(1.85)
-
-
-
-
-
0.08
-
-
0.01
-
-
-
0.02
1.56
32
C.
(Purchase) / Sale of
Investments
(Proft) / Loss on sale
of Investments (net)
Dividend income
Net cash from/
(used in) Investing
Activities (B)
CASH FLOW FROM
FINANCING
ACTIVITIES
Capital introduced/
withdrawn (net)
Proceeds from issue
of shares (Refer note
2 below)
Proceeds from
borrowings (net of
repayment)
Interest paid
Net cash from/
(used in) Financing
Activities (C)
Net increase/
(decrease) in Cash
and Cash
Equivalents
(A+B+C)
Cash and Cash
Equivalents at the
beginning of the
year/period
Cash and Cash
Equivalents at the
end of the
year/period
Components of
Cash and Cash
Equivalents at the
end of the
year/period
Cash in hand
Balance with
scheduled banks
Current account
EEFC account
Add: Effect of
exchange difference
(closing)
Fixed deposit/ margin
money
-
-
-
-
-
-
-
-
-
-
-
-
(0.08)
(0.26)
(0.08)
(0.10)
(0.01)
(0.59)
(0.29)
-
-
(39.41)
42.88
(71.27)
(37.47)
(6.59)
-
-
-
-
-
-
(3.24)
(0.57)
3.42
(0.70)
39.44
(0.30)
(47.49)
(1.01)
64.82
(1.45)
(13.35)
(22.81)
(188.26)
(22.89)
(3.81)
2.72
(0.27)
(5.62)
(7.90)
(73.63)
(217.74)
0.16
(0.48)
0.16
0.15
(0.37)
(0.05)
(35.05)
0.47
0.39
0.21
0.06
0.43
3.53
38.57
0.63
(0.09)
0.37
0.21
0.06
3.48
3.52
0.36
0.40
0.37
0.20
0.05
2.11
3.41
0.05
-
0.07
-
-
0.01
-
0.01
-
2.20
-
0.11
-
-
7.28
-
-
-
-
0.41
0.47
0.21
0.06
4.31
3.52
33
0.02
0.39
ISSUE DETAILS IN BRIEF
Issue Details
Public Issue of Equity Shares
of which
A. Qualified Institutional Buyers portion
Of which
Available for Mutual Funds only
Balance of QIB portion (available for all QIBs
including Mutual Funds)
Particulars
1,30,00,000 Equity Shares aggregating ` [] Crores
Upto 65,00,000 Equity Shares aggregating to ` []
Crores
Up to 3,25,000 Equity Shares aggregating to ` []
Crores
61,75,000 Equity Shares aggregating ` [] Crores
B. Non Institutional Portion
Not less than 19,50,000 Equity Shares aggregating
to ` [] Crores , constituting not less than 15% of
the Issue size
C. Retail Portion
Not less than 45,50,000 Equity Shares aggregating
to ` [] Crores , constituting not less than 35% of
the Issue size
Equity Shares outstanding prior to the
Issue
Equity Shares outstanding after the Issue
2,50,00,000 Equity Shares
Use of Proceeds
Refer Chapter titled “Objects of the Issue” beginning
on page 53 of the Draft Red Herring Prospectus for
information on use of Issue Proceeds
3,80,00,000 Equity Shares
Allocation to all categories shall be made on proportionate basis.
Under subscription, if any, in any of the categories, would be allowed to be met with spill over inter se
from any other category, at the sole discretion of our Company in consultation with the BRLM.
34
GENERAL INFORMATION
Our Company was originally formed as Partnership firm under the name and style of C. Mahendra
Infojewels vides partnership deed dated 24th February, 2000. Subsequently the partnership firm was
converted in to public limited company under part IX of the Companies Act, 1956 in the name C.
Mahendra Infojewels Limited on 10th August 2010. For further details in relation to the corporate history of
our company, refer to the chapter titled “History and other corporate matters “beginning on page no 101
of this Draft Red herring prospectus.
Registered Office of the company
214/A, Paradise Complex,
Sayaji Gunj,
Vadodara-390005.
Gujarat, India
Tel. No.: +91 265 2363493
Fax No.: +91 265 2363493
Website: www.cminfojewels.com
Email ID: [email protected]
Administrative office of the company
Plot No 16(p)-17,28 &29(p)
Seepz(MIDC), Andheri (East)
Mumbai 400 096.
Maharashtra,
India
Tel No.: +91 22 40707070
Fax No.: +91 22 28292258
Website: www.cminfojewels.com
Email ID: [email protected]
Corporate Identification Number of Our Company is U36912GJ2010PLC061930
The Company is registered with the Registrar of Companies, Gujarat, Dadra and Nagar Haveli at
Ahmedabad.
The Address of Registrar of Companies is as follows:
ROC Bhavan,
Opp Rupal Park Society,
Behind Ankur Bus Stop,
Naranpura,
Ahmedabad- 380 013
Tel: 91-079-27437597
Fax: 91-079-27438371
Email: [email protected]
Our Board of Directors:
The Board of Directors consists of the following:
Sr.
Board of Directors
1. Jesingbhai Badaramal
Parikh
2. Shrikant Jeisingbhai
Parikh
3. Sona Akash Parikh
Designation
Chairman
Managing Director
Whole Time Director
35
Status
Non Independent Non
Executive Director
Non Independent
Executive Director
Non Independent
Executive Director
DIN
01691567
00112642
03283751
4. Amul Patel
Independent Director
5. Malay Karbhari
Independent Director
6. Shankar Bhagat
Independent Director
Independent Non
Executive Director
Independent Non
Executive Director
Independent Non
Executive Director
00183464
02940417
01359807
Company Secretary
Ms. Shradha Bhimani is the Company Secretary of our Company. Her contact details are as follows:214-A, Paradise Complex, Sayaji Gunj
Vadodara, 390 005
Gujarat, India
Tel. No. : +91 265 2363493
Fax No. : +91 265 2363493
Website.: [email protected]
Email ID : [email protected]
Compliance Officer
Mr. Akash Parikh is the Compliance Officer of our Company. His contact details are as follows:Plot No 16(p)-17,28 &29(p)
Seepz(MIDC), Andheri (East)
Mumbai 400 096.
Maharashtra, India
Tel No.: +91 22 40707070
Fax No. : +91 22 28292258
Website : [email protected]
Email ID : [email protected]
Investors are advised to contact the Compliance Officer Mr. Akash Parikh and / or the Registrar to
the Issue and/or Book Running Lead Manager to the Issue i.e. Corporate Strategic Allianz Ltd, in
case of any pre-Issue or post-Issue problems such as non-receipt of letters of Allocation, credit of
Allotted Equity Shares in the respective beneficiary account, non-receipt of refund orders, non
receipt of funds by electronic mode etc.
For all Issue related queries and for redressal of complaints, investors may also write to the Book
Running Lead Manager. All complaints, queries or comments received by SEBI shall be forwarded to the
Book Running Lead Manager, who shall respond to the same.
All grievances relating to the ASBA process may be addressed to the Registrar to the Issue, with a copy
to the SCSBs, giving full details such as name, address of the applicant, number of Equity Shares applied
for, Bid Amount blocked, ASBA Account number and the Designated Branch of the SCSBs where the
ASBA Form was submitted by the ASBA Bidders.
BANKERS TO OUR COMPANY
Bank of India
SEEPZ MID Corporate Branch,
Behind SEEPZ Service centre,
Marol Industrial Area,
Andheri (East), Mumbai-400 096
Tel No.: +91 22 28291443/ 29281744
Fax No.:+91 22 28291633
36
Contact Person: Mr. S. D. Chitre
Website: [email protected]
Email ID: [email protected]
Union Bank of India
Overseas SEEPZ Branch,
#007 Block II, Seepz++ Complex,
Jogeshwari-Vikhroli Link Road,
Andheri (East), Mumbai-400 096
Tel No.: +91 22 28292531
Fax No.: +91 22 28292804
Contact Person: Ms. N. K. Mallya
Website: www.unionbankofindia.co.in
Email ID: [email protected]
STATUTORY AUDITORS TO OUR COMPANY
M/s. R.H.Modi & Co.
Room No. 11, Singh House
23, Ambalal Doshi Marg,
2nd Follr, Fountain
Mumbai – 400 023 (Maharashtra)
Tel: (o) : + 91 22 32968336/ 22656216
Fax No. : + 91 22 22042386
Email: [email protected]
Contact Person: Rajendra H.Modi
FRN NO: 106486W
ISSUE MANAGEMENT TEAM
BOOK RUNNING LEAD MANAGER
REGISTRARS TO THE ISSUE
Corporate Strategic Allianz Limited
SEBI REGN NO: INM 000011260
402, Samedh Complex,
Near Associated Petrol Pump,
C G Road
Ahmedabad – 380 006,
Gujarat – India
TeleFax: + 91-079- 4002 4670
Email: [email protected]
Investors Grievance: [email protected]
Website: www.csapl.com
Contact Person: Mr. Chetan Sharma
LEGAL ADVISOR TO THE ISSUE
Sharepro Services (India) Private Limited
SEBI REGN NO.: INR000001476
607/608,Sagar Tech Plaza, A Wing, Sakinaka
Junction, Andheri (East), Mumbai – 400 072,
Maharashtra – India
Tel: +91-22- 61915402 / 5404,
Fax: +91-22- 61915444
Email: [email protected]
Website: www.shareproservices.com
Contact Person: Mr. Subhash Dhingreja/
Mr. Satheesh H. K.
Awadhesh S. Singh
314, Hindrajastah Building,
95,Dadsaheb Phalke Road,
Dadar (East), Mumbai – 400 014,
Maharashtra – India
TeleFax: + 91-22- 24150051/ 24147766
Email: [email protected]
BANKERS TO THE ISSUE AND ESCROW
COLLECTION BANKS
The Bankers to the Issue shall be appointed
prior to filing of the Red Herring Prospectus
SYNDICATE MEMBERS
The Syndicate Member(s) shall be appointed
prior to filing of the Red Herring Prospectus with
RoC.
REFUND BANKER TO THE ISSUE
The Refund Banker(s) shall be appointed prior to
filing of the Red Herring Prospectus with RoC.
37
with RoC.
SELF CERTIFIED SYNDICATE BANKS
The lists of banks that have been notified by
SEBI to act as SCSB for the ASBA Process
are provided on www.sebi.gov.in. For details
on designated branches of SCSBs collecting
the ASBA Bid cum Application Form, please
refer the above mentioned SEBI link.
BROKERS TO THE ISSUE
All the members of recognised stock exchanges
would be eligible to act as brokers to the issue.
STATEMENT OF INTER-SE ALLOCATION OF RESPONSIBILITIES BETWEEN BRLM’s
Since Corporate Strategic Allianz Limited is the sole Book Running lead Manager to the issue, all the
responsibility of the issue will be managed by them.
CREDIT RATING
As this is an issue of Equity Shares, credit rating is not required.
IPO Grading
This Issue being has been graded by [•]. The rationale furnished by the credit rating agency for its grading
will be updated at the time of filing the Red Herring Prospectus with RoC.
Trustees
As this is an issue of Equity Shares, the appointment of Trustees is not required.
APPRAISAL
The Object of this issue has not been appraised by any Agency. The objects of this issue and means of
finance therefore are based on internal estimates of our company.
MONITORING AGENCY
As the net proceeds of the Issue will be less than ` 50,000 Lakhs, under sub-regulation (1) Regulation 16
of SEBI (ICDR) Regulations, 2009 our company is not required to appoint a monitoring agency in relation
to the issue. However, as per Clause 49 of Listing Agreement to be entered into with the stock exchanges
upon listing of the equity shares and the Corporate Governance Requirements, the Audit Committee of
our Company, would be monitoring the utilization of the proceeds of the issue.
Statement of Responsibility
Corporate Strategic Allianz Limited is the sole BRLM to the Issue.
Book Building Process
Book building process, with reference to the Issue, refers to the process of collection of Bids from
investors, which is based on the Price Band, The Issue Price is finalized after the Bid/ Issue Closing Date.
The principal parties involved in the Book Building Process are:
1. Our Company;
2. The Book Running Lead Manager, in this case being Corporate Strategic Allianz Ltd.;
3. Syndicate Members who are intermediaries registered with SEBI or registered as brokers with
BSE and eligible to act as Underwriters. The Syndicate Members are appointed by the Book
Running Lead Manager;
38
4. Registrar to the Issue; in this case being Sharepro Services (I) Private Limited
5. Escrow Collection Bank(s), Refund Bank(s).
6. Self Certified Syndicate Banks.
SEBI, through its ICDR Regulation has permitted the Issue of Securities to the public through the 100%
Book Building Process, wherein upto 50% of the Issue to the public shall be allocated on a proportionate
basis to eligible Qualified Institutional Buyers (“QIB”). 5% of the QIB Portion shall be available for
allocation on a proportionate basis to Mutual Funds only and the remainder of the QIB Portion shall be
available for allocation on a proportionate basis to all other eligible QIBs, including Mutual Funds, subject
to valid Bids being received at or above the Issue Price. Further, not less than 15% of the Issue to the
Public Shall be available for allocation on a proportionate basis to Non-Institutional Bidders and not less
than 35% of the Issue to the Public shall be available for allocation on a proportionate basis to Retail
Individual Bidders, subject to valid Bids being received at or above the Issue Price.
In accordance with the SEBI Regulations, QIBs are not allowed to withdraw their Bid(s) after the
Bid /Issue Closing Date. For further details please refer the section titled Terms of the Issue page 199 of
the Draft Red Herring Prospectus.
The retail individual bidders have the option to submit their Bids under the “ASBA Process”, which would
entail blocking of funds in the investor’s bank account rather than immediate transfer of funds to the
respective Escrow Accounts. For details, refer paragraph titled “Issue Procedure” beginning on Page 205
of the Draft Red Herring Prospectus under chapter titled “Issue Procedure”.
Our Company shall comply with the SEBI (ICDR) Regulations, 2009 and any other directions issued by
SEBI for this Issue. In this regard, we have appointed Corporate Strategic Allianz Limited as the BRLM to
manage the Issue.
The process of Book Building under the SEBI (ICDR) Regulations, 2009 is subject to change from
time to time and Investors are advised to make their own judgment about investment through this
process prior to making a Bid or Application in the Issue.
Steps to be taken by the Bidders for bidding
™ Check eligibility for making a bid (for further details, refer to the chapter titled ‘Issue Procedure’
beginning on page 205 of the Draft Red Herring Prospectus);
™ Bidders necessarily need to have a demat account and ensure that the demat account details are
correctly mentioned in the Bid Cum Application Form / ASBA Bid Cum Application Form;
™ Except for Bids on behalf of the Central or State Government, residents of the state of Sikkim and
the officials appointed by the courts, for Bids of all values ensure that you have mentioned PAN in
your Bid cum Application Form. In accordance with the SEBI Rules and Regulations, the PAN
would be the sole identification number for participants transacting in the securities market,
irrespective of the amount of transaction (refer chapter titled “Issue Procedure” on page 205 of
the Draft Red Herring Prospectus. Bidders are specifically requested not to submit their GIR
number instead of the PAN as the Bid is liable to be rejected.
™ Ensure that the Bid Cum Application Form is duly completed as per instructions given in the Red
Herring Prospectus and in the Bid Cum Application Form and the ASBA Bid cum Application
Form;
™ Bids by QIBs will only have to be submitted to the BRLM and
™ Bids by ASBA Bidders will have to be submitted to the designated branches of the SCSBs or can
even be submitted to the Members of the Syndicate. ASBA Bidders should ensure that their bank
accounts have adequate credit balance at the time of submission to the SCSB to ensure that the
ASBA Bid cum Application Form is not rejected
39
Illustration of Book Building and Price Discovery Process:
(Investors should note that the following is solely for the purpose of illustration and is not specific to this
Issue)
The Bidders can bid at any price within the Price Band. For instance, assume a Price Band of ` 20/- to `
24/- per Equity Share, Issue size of 3,000 Equity Shares and receipt of five Bids from the Bidders, details
of which are shown in the table below. A graphical representation of the consolidated demand and price
will be made available at the websites of the BSE (www.bseindia.com) during the Bidding/ Issue Period.
The illustrative book as set forth below shows the demand for the Equity Shares of our Company at
various prices and is collated from Bids from various investors.
Bid Quantity
Bid Price (`)
500
1,000
1,500
2,000
2,500
24
23
22
21
20
Cumulative Quantity
500
1,500
3,000
5,000
7,500
Subscript
ion
16.67%
50.00%
100.00%
166.67%
250.00%
The price discovery is a function of demand at various prices. The highest price at which our Company is
able to issue the desired quantity of Equity Shares is the price at which the book cuts off, i.e., ` 22 in the
above example. The Issuer Company, in consultation with the BRLM, will finalize the Issue Price at or
below such cut off price, i.e., at or below ` 22. All Bids at or above this Issue Price and cut-off Bids are
valid Bids and are considered for allocation in the respective category.
WITHDRAWAL OF THE ISSUE
Our Company, in consultation with the BRLM, reserves the right not to proceed with the Issue any time
after the Bid/Issue Opening Date but before the Allotment of Equity Shares.
In such an event, our Company would issue a public notice in the newspapers, in which the pre Issue
advertisements were published, within two days of the Bid/ Issue Closing Date, providing reasons for not
proceeding with the Issue. Our Company shall also inform the same to Stock Exchanges on which the
Equity Shares are proposed to be listed.
If the Company withdraws the Issue and thereafter determines that it will proceed with an initial public
offering of its Equity Shares, it shall file a fresh Draft Red Herring Prospectus with the SEBI.
Bid/Issue Programme
Bidding Period/Issue Period
BID/ISSUE OPENS ON
BID/ISSUE CLOSES ON
[]
[]
Bids and any revision in Bids shall be accepted only between 10.00 a.m. and 5.00 p.m. (Indian Standard
Time) during the Bidding Period as mentioned above at the bidding centres mentioned on the Bid cum
Application Form except that on the Bid/Issue Closing Date, Bids and any revision in Bids shall be
accepted only between 10.00 a.m. and 3.00 p.m. (Indian Standard Time) during the Bidding Period
(excluding the ASBA Bidders) and uploaded till (i) 4.00 p.m. in case of Bids by QIBs and Non-Institutional
Bidders and (ii) until 5.00 p.m. or such extended time as permitted by BSE, in case of Bids by Retail
Individual Bidders. It is clarified that the Bids not uploaded in the book would be rejected. Bids by the
ASBA Bidders shall be uploaded by the SCSB in the electronic system to be provided by the BSE.
40
In case of discrepancy in the data entered in the electronic book vis-a-vis the data contained in the
physical Bid form, for a particular Bidder, the details as per the physical form of the Bidder may be taken
as the final data for the purpose of Allotment. In case of discrepancy in the data entered in the electronic
book vis-a-vis the data contained in the physical or electronic Bid cum Application Form, for a particular
ASBA Bidder, the Registrar to the Issue shall ask for rectified data from the SCSB.
Due to limitation of time available for uploading the Bids on the Bid/ Issue Closing Date, the Bidders are
advised to submit their Bids one day prior to the Bid/ Issue Closing Date and, in any case, no later than
the times mentioned above on the Bid/ Issue Closing Date. All times mentioned in the Draft Red Herring
Prospectus are Indian Standard Time. Bidders are cautioned that in the event a large number of Bids are
received on the Bid/ Issue Closing Date, as is typically experienced in public offerings, some Bids may
not be uploaded due to lack of sufficient time. Such Bids that cannot be uploaded will not be considered
for allocation under the Issue. If such Bids are not uploaded, the Company, the BRLM and Syndicate
member will not be responsible. Bids will be accepted only on Business Days.
On the Bid/ Issue Closing Date, extension of time will be granted by the Stock Exchanges only for
Uploading the Bids submitted by Retail Individual Bidders after taking into account the total number of
Bids received up to the closure of time period for acceptance of Bid cum Application Forms as stated
herein and reported by the BRLM to the Stock Exchanges within half an hour of such closure.
The Company in consultation with the BRLM, reserve the right to revise the Price Band during the
Bidding/ Issue Period, provided that the Cap Price shall be less than or equal to 120% of the Floor Price
and the Floor Price shall not be less than the face value of the Equity Shares. The revision in Price Band
shall not exceed 20% on the either side i.e. the floor price can move up or down to the extent of 20% of
the floor price disclosed in this Red Herring Prospectus and the Cap Price will be revised accordingly.
In case of revision of the Price Band, the Issue Period will be extended for a minimum of three additional
working days after revision of Price Band subject to the Bid/Issue Period not exceeding 10 working days.
Any revision in the Price Band and the revised Bid/Issue Period, if applicable, will be widely disseminated
by notification to the Stock Exchanges, by issuing a press release and also by indicating the changes on
the websites of the BRLM and at the terminals of the Syndicate.
UNDERWRITING AGREEMENT
After the determination of the Issue Price and allocation of Equity Share, but prior to filing of the
Prospectus with the RoC, our Company will enter into an Underwriting Agreement with the Underwriters
for the Equity Shares proposed to be issued in this Issue. It is proposed that pursuant to the terms of the
Underwriting Agreement, the BRLMs shall be responsible for bringing in the amount devolved in the event
the Syndicate Members do not fulfill their underwriting obligations. Pursuant to the terms of the
Underwriting Agreement dated [], the obligations of the Underwriters are several and not joint and are
subject to certain conditions, as specified therein.
The Underwriters have indicated their intention to underwrite the following number of Equity Shares:
(This Portion has been intentionally left blank and will be filed in before filling of Prospectus with ROC)
Name and Address of the Underwriter Indicative number of Amount Underwritten (` in
Equity Shares to be Crores)
Underwritten
Corporate Strategic Allianz Limited
[]
[]
402, Samedh Complex,
Nr. Associated Petrol Pump,
C.G. Road,
Ahmedabad – 380006
SEBI Regn No: INM000011260
[]
[]
[]
41
The above-mentioned amount is indicative underwriting and would be finalized after determination of the
Issue Price and actual allocation.
In the opinion of the Board of Directors of the company (based on a certificate given by the Underwriters),
the resources of the above mentioned underwriters are sufficient to enable them to discharge their
respective underwriting obligations in full. The abovementioned Underwriters are registered with SEBI
and are eligible to underwrite as per applicable guideline.
Allocation among Underwriters may not necessarily be in proportion to their underwriting commitments.
Notwithstanding the above table, the BRLMs and the Syndicate Members shall be responsible for
ensuring payment with respect to Equity Shares allocated to investors procured by them. In the event of
any default in payment, the Underwriter, in addition to other obligations defined in the Underwriting
Agreement, will also be required to procure / subscribe to the Equity Shares to the extent of the defaulted
amount as specified in the Underwriting Agreement. For further details about allocation please refer to
“Other Regulatory and Statutory Disclosures” on page 188 of this Offer Document.
42
CAPITAL STRUCTURE
The Equity Share Capital of our Company as on the date of filing of this Draft Red Herring Prospectus
with SEBI (before and after the issue) is set forth below:
Particulars
A
B
C
j
Nominal
Value (`)
Authorized Equity Capital
4,00,00,000 Equity Shares of ` 10/- each
Issued, Subscribed & Paid-up Share Capital
prior to the Issue
2,50,00,000 Equity Shares of ` 10/- each
Present Issue in Terms of this Draft Red
Herring Prospectus #
1,30,00,000 Equity Shares of ` 10/- each fully
paid- up
E
25.00
25.00
13.00
[]
Of which,
™ QIB Portion of upto 65,00,000 equity
shares of ` 10/-*
™ Non Institutional Portion not less than
19, 50,000 equity shares of ` 10 each.
™ Retail portion of not less than 45,50,000
equity shares of ` 10/- each.
D
40.00
Aggregate
Value
(` In crores)
40.00
Issued, Subscribed and Paid up Capital
after Issue.
3,80,00,000 Equity Shares of ` 10/- each
Share Premium Account
Share Premium Account before the Issue
Share Premium Account after the Issue**
[]
[]
[]
[]
[]
[]
38.00
[]
Nil
[]
Nil
[]
# The present issue of 1,30,00,000 equity shares in terms of this Draft Red Herring Prospectus has been
authorised by a resolution of our Board dated 19th January, 2012 and by a special resolution passed
pursuant to Section 81(1A) of the Companies Act, 1956 at the EGM by the shareholders of our Company
held on 14th February, 2012
* 5% of the QIB portion i.e 3,25,000 Equity Shares of ` 10/- each are available for allocation on a
proportionate basis to Mutual Funds and the remainder of the QIB portion shall be acailable for Allocation
on a proportionate basis to all QIB Bidders including Mutual Funds.
*Subject to valid bids being received at or above the Issue Price, in case of under subscription, if any, in
the Issue, spillover to the extent of under subscription shall be permitted from other categories or a
combination of categories in the Issue at the description of our company in consultation with BRLM and
the Designated Stock Exchange. Such inter-se spillover, if any, would be effectuated in accordance with
applicable laws, rules, regulations and guidelines.
** The Securities Premium Account after the Issue will be determined after Book Building Process.
43
Notes to Capital Structure
2. Increase in Authorized Share Capital since Incorporation
Date
Particulars of
Increase
Increased (No of Shares)
10/08/2010
Subscription to the
Memorandum
Increase in
Authorised Share
Capital
From
11/07/2011
Equity
Shares
Face
Value
in `
Resolution
Passed at
0
To
30,00,00,000
3,00,00,000
10
N.A
30,00,00,000
40,00,00,000
4,00,00,000
10
EGM
3. Share Capital History : Our Existing Share Capital has been subscribed and allotted as under :
Equity Share Capital
Date of
Allotment/
Fully Paid
Up
10/08/2010
No. of
Equity
Shares
Allotted
25000000
Face
Valu
e (`)
Issue
Price
(`)
Considerat
ion
Cumulative
Number of
Equity Shares
10
10
On
conversion
of partners’
capital into
share
capital
2,50,00,000
Cumulative
Paid up
Share
Capital
(` in
Crores)
25.00
Cumulati
ve Share
Premium
(` in
Crores)
NIL
4. Equity Shares Issued for Consideration other than Cash :
Except as set out in the table below, we have made no issues of shares for consideration other than
cash :
Date of
Name of Allottees
Number of
Face
Reason for
Whether
Allotment
Equity
Valu
Allotment
benefits have
Shares
accrued to
e (`)
the issuer
10/08/2010
Shri Shrikant Parikh
10/08/2010
Shri Jesingbhai B Parikh
10/08/2010
C. Mahendra Jewels
Private Limited
Minal Industries Ltd
10/08/2010
10/08/2010
10/08/2010
Minal Infracons Private
Limited
Minal Infrastructures and
Properties Private Limited
1,18,75,000
10
1,87,500
10
81,25,000
10
46,25,000
10
62,500
10
62,500
10
44
Subscription
Memorandum
Subscription
Memorandum
Subscription
Memorandum
Subscription
Memorandum
Subscription
Memorandum
Subscription
Memorandum
No
No
No
No
No
No
10/08/2010
Minal Lifestyle Private
Limited
Total
62,500
10
Subscription
Memorandum
No
2,50,00,000
The shares have been issued to the partners of erstwhile partnership firm C. Mahendra Infojewels on
account of conversion under Part IX of the Companies Act, 1956 as subscribers’ to the MOA.
5.
Details of Build Up, Contribution and Lock in of Promoters
A. Capital built up of the Promoters
Name of
the
Promoter
Date of
Allotment /
Transfer and
made fully
paid
Nature of
Allotment
No. of
Shares
Cummulati
ve Shares
Face
Value
(`)
Issue/
Transfe
r Price
(`)
Consid
eration
% of
Pre
issue
capital
% of
Post
issue
capital
0.75
0.49
Shri
Jeshinglal
B Parikh
10/08/2011
Subscription
to the
Memorandum
1,87,500
1,87,500
10
10
On
conver
sion of
partner
s
capital
into
share
capital
Shri
Shrikant
Parikh
10/08/2010
Subscription
to the
Memorandum
1,18,75,000
1,18,75,000
10
10
On
conver
sion of
partner
s
capital
into
share
capital
01/12/2011
Transfer from
MInal
Industries
Limited
Subscription
to the
Memorandum
4,00,000
1,22,75,000
10
10
Cash
49.10
32.30
81,25,000
81,25,000
10
10
32.50
21.38
46,25,000
46,25,000
10
10
On
conver
sion of
partner
s
capital
into
share
capital
On
conver
sion of
partner
s
capital
into
share
C.
Mahendra
Jewels Pvt.
Ltd*
10/08/2010
Minal
Industries
Limited
10/08/2010
Subscription
to the
Memorandum
45
capital
(4,00,000)
42,25,000
10
10
cash
16.90
11.13
Transfer to
Shrikant
Parikh
* C. Mahendra Jewels Pvt. Ltd ( Transferor company) will be merged with Minal Industries Limited
(Transferee Company) With effect from 1st April 2010 and subject to the provisions of amalgamation
scheme , the entire undertaking of the Transferor Company including the assets and liabilities as on 1st
April,2010 shall pursuant to Section 394(2) of the Act, without any further act, instrument or deed, be and
shall stand transferred to and vested in and/or be deemed to have been and stood transferred to and
vested in the Transferee Company
01/12/2011
Details of aggregate shareholding of the promoter group and of the directors of the promoters,
where the promoter is a body corporate
(1) C Mahendra Jewels Pvt. Ltd
Sr. No
Name of the Shareholders
1.
Jesingbhai Badarmal Parikh
2.
Mahendra Chandulal Shah
3.
Champak kiritlal Mehta
4.
Nirvani Trust
Total
No. of Shares
9,75,000
5,25,000
5,25,000
9,75,000
30,00,000
(2) Minal Industries Ltd
Sr. No
Name of the Shareholders
1.
Jesingbhai Badarmal Parikh
2.
Vikram Parikh
3.
Shri Shrikant Parikh
4.
Arpita Shrikant Parikh
5.
Amulkumar Jethalal Patel
6.
Jugatram Vijayshankar Joshi
Total
No. of Shares
3,01,26,055
7,78,685
0
0
0
0
3,09,04,740
B. Details of Promoters contribution locked in for three years
Pursuant to the provisions Regulation 36 of SEBI ICDR Regulations, an aggregate of 20% of the postIssue Equity Capital of the Company held by Promoters shall be locked in for a period of three years from
the date of Allotment of Equity Shares in the Issue. The details of such lock in are given below:
Name
of
Promot
er
Date of
allotment
/ Transfer
and made
fully paid
Nature of
allotment
(Bonus,
Rights etc.)
No. of
Shares
Face
Value
(`)
Issue/
Transfe
r Price
(`)
Considerati
on
Cummul
ative
Shares
% of Post
Issue
Capital
Lock
in
period
(Years)
Shri
Shrikant
Parikh
10/08/201
0
Subscription
to the
Memorandum
76,00,0
00
10
10
Other Than
Cash
76,00,00
0
20%
3 years
In compliance with Regulation 33 sub-regulation (1) clause (b) of SEBI ICDR Regulations, the aforesaid
shares are eligible to form a part of promoter’s contribution.
46
Our Promoters have given specific written consent for inclusion of the aforesaid Equity Shares as a part
of promoters contribution which is subject to lock-in period of 3 years from the date of Allotment of Equity
Shares in the proposed issue or date of commencement of commercial production whichever is later. The
above Equity Shares are eligible for computation of promoter’s contribution and lock-in in terms of
Regulation 33 of SEBI ICDR Regulations.
Other than the Equity Shares locked-in as Promoter’s contribution for a period of three years as stated in
the table above, the entire pre-issue capital of our company shall be locked in for a period of one year; as
per Regulation 36 clause (b) and Regulation 37 of the SEBI ICDR Regulations.
The Promoters’ contribution has been brought in being not less than the specified minimum lot and from
the persons defined as Promoters under the SEBI ICDR Regulations.
6. We confirm that the minimum Promoters’ contribution of 20% of the post-Issue Capital, which is
subject to lock-in for three years, does not consist of:
a. Equity Shares acquired within three years before the filing of the Draft Red Herring Prospectus
with SEBI for consideration other than cash and revaluation of assets or capitalisation of
intangible assets or resulting from a bonus issued by utilization of revaluation reserves or
unrealized profits of our Company or from bonus issue against Equity Shares which are
ineligible for minimum Promoter’s contribution.
b. Securities acquired by our Promoters, during the preceding one year, at a price lower than the
price at which Equity Shares are being offered to the public in the Issue.
c. Private placement made by solicitation of subscription from unrelated persons either directly or
through any intermediary.
d. Promoters’ contribution has been brought in to the extent of not less than the specified minimum
lot and from persons defined as promoters under SEBI (ICDR) Regulations, 2009.
e. Equity Shares for which specific written consent has not been obtained from the respective
shareholders for inclusion of their subscription in the minimum Promoter’s contribution subject to
lock-in.
f. Pledged Equity Shares held by our Promoters.
7. Details of transactions of purchase or sell by the promoter group and /or by the directors of the
company which is a promoter of the issuer and/or by the directors of the issuer and their immediate
relatives (as defined under sub-clause (zb) sub-regulation (1) Regulation 2 of the SEBI (ICDR)
Regulations, 2009) in Equity Shares within six months immediately preceding the date of filing of the
Draft Red Herring Prospectus with SEBI
Transferor
Transferee
Date of
No. of
Transaction
Nature of
Transaction
Equity
Transaction
Price(`)
Shares
Minal Industries
Limited
8.
Shrikant Parikh
01.12.2011
4,00,000
10
Purchase of
shares by
promoter from
corporate
promoter
Details of shareholding pattern of Our Company, before and after the Issue.
The shareholding pattern of our Company before the Issue as prescribed under clause 35 of the
Listing Agreement is mentioned below:
47
Category
Code
(I)
(A)
(1)
(a)
(b)
(c)
(d)
(e)
(2)
(a)
(b)
(c)
(d)
(B)
(1)
(a)
(b)
(c)
(d)
(e)
(f)
(g)
(h)
(2)
(a)
Category
Shareholder
(II)
of
Promoter
and
Promoter Group
Indian
Individuals/HUF
Central
Government/
State Govt(s)
Bodies Corporate
Financial
Institutions/Banks
Any
Other
(specify)
Sub-Total (A)(1)
Foreign
Individuals (NonResident
Individuals/
Foreign
Individuals)
Bodies Corporate
Institutions
Any
Other
(specify)
Sub-Total (A)(2)
Total
Shareholding of
Promoter
and
Promoter Group
(A)=(A)(1)+(A)(2)
Public
Shareholding
Institutions
Mutual Funds/UTI
Financial
Institutions/Banks
Central
Government/State
Government(s)
Venture
Capital
Funds
Insurance
companies
Foreign
Institutional
Investors
Foreign Venture
Capital Investors
Any
Other
(specify)
Sub Total (B) (1)
Non Institutions
Bodies Corporate
No.
of
Shareholders
(III)
Total
No.
shares
(IV)
of
of
No. of Shares
held
in
Dematerialized
form
(V)
Total
Shareholding as
a % of total no of
shares
Shares
pledged
or
otherwise encumbered
As a
% of
(A+B)
(VI)
As a %
of
(A+B+C)
(VII)
No. of
Shares
(VIII)
As a %
(IX)=
(VIII)/(IV)*100
2
Nil
1,24,62,500
Nil
Nil
Nil
49.85
Nil
49.85
Nil
Nil
Nil
Nil
Nil
5
Nil
1,25,37,500
Nil
Nil
Nil
50.15
Nil
50.15
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
7
2,50,00,000
Nil
100.00
100.00
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
7
2,50,00,000
Nil
100.00
100.00
Nil
Nil
7
2,50,00,000
Nil
100.00
100.00
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
48
(b)
(c)
(C)
Individuals(i) Individual
shareholders
holding
nominal share
capital up to `
1 lakh.
(ii) Individual
shareholders
holding
nominal share
capital
in
excess of ` 1
lakh
Any
other
(specify)
Sub-Total (B)(2)
Total
Public
Shareholding (B)=
(B)(1)+(B)(2)
Total (A)+(B)
Shares held by
Custodians and
against which the
depository
receipts
have
been issued
(i) Promoter and
Promoter
Group
(ii) Public
GRAND TOTAL
(A)+(B)+(C)
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
7
Nil
2,50,00,000
Nil
100.00
Nil
100.00
Nil
100.00
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
7
Nil
2,50,00,000
Nil
100.00
Nil
100.00
Nil
100.00
Nil
Nil
Nil
Nil
The Pre and Post Issue Shareholding pattern of our company is as follows: Sr.
Particulars
A
Promoters
Shri Shrikant Parikh
Shri Jesingbhai B Parikh
C. Mahendra Jewels Private
Limited
Minal Industries Ltd
Sub Total … (1)
Promoters Group
Minal Infracons Private Limited
Minal Infrastructures and
Properties Private Limited
Minal Lifestyle Private Limited
Sub Total … (2)
Public Issue
B
C
Total ( 1+2)
Pre- Issue
No. of
% Holding
Shares
Post- Issue
No. of
%
Shares
Holding
1,22,75,000
1,87,500
81,25,000
49.10
0.75
32.50
1,22,75,000
1,87,500
81,25,000
32.30
0.49
21.38
42,25,000
2,48,12,500
16.90
99.25
11.13
65.30
62,500
62,500
0.25
0.25
42,25,000
2,48,12,500
1,87,500
62,500
62,500
62,500
1,87,500
0
0.25
0.75
0
62,500
1,87,500
1,30,00,000
0.16
0.48
34.22
2,50,00,000
100.00
3,80,00,000
100.00
9. The Top Ten Shareholders of our Company and their Shareholding is set forth below:-
49
0.16
0.16
(a) Particulars of the top Seven shareholders as on the date of filling the Draft Red Herring
Prospectus with SEBI, as the company has seven shareholders on the date of filling the Draft Red
Herring Prospectus.
Sr.
No
1.
2.
3.
4.
5.
6.
7.
Name of the Shareholders
No. of Shares
Shri Shrikant Parikh
C. Mahendra Jewels Pvt. Ltd
Minal Industries Limited
Shri Jeshinglal B Parikh
Minal Lifestyles Pvt. Ltd
Minal Infracons Pvt. Ltd
Minal Infrastructures & Properties Pvt.
Ltd
Total
% of the Issued Capital
1,22,75,000
81,25,000
42.25,000
1,87,500
62,500
62,500
62,500
49.10
32.50
16.90
00.75
00.25
00.25
00.25
2,50,00,000
100
(b) Particulars of the top seven shareholders ten days prior to the date of filling the Draft Red Herring
Prospectus with SEBI as the company has seven shareholders on the date of filling the Draft Red
Herring Prospectus.
Sr.
No
1.
2.
3.
4.
5.
6.
7.
Name of the Shareholders
No. of Shares
Shri Shrikant Parikh
C. Mahendra Jewels Pvt. Ltd
Minal Industries Limited
Shri Jeshinglal B Parikh
Minal Lifestyles Pvt. Ltd
Minal Infracons Pvt. Ltd
Minal Infrastructures & Properties
Pvt..Ltd
Total
% of the Issued Capital
1,22,75,000
81,25,000
42.25,000
1,87,500
62,500
62,500
62,500
49.10
32.50
16.90
00.75
00.25
00.25
00.25
2,50,00,000
100
( c) Particulars of the top seven shareholders two years prior to the date of filling the Draft Red
Herring Prospectus with SEBI.
The company was incorporated on August 10, 2010 hence there were no shareholders two years
prior to the date of filling the Draft Red Herring Prospectus with SEBI.
10.In terms of Regulation 39 of the SEBI ICDR Regulations, the Equity Shares held by our Promoters
locked-in for a period of one year can be pledged with any scheduled commercial banks or public
financial institutions as collateral security for loans granted by such scheduled commercial banks or
public financial institutions, provided that the pledge of shares is one of the terms of sanction of such
loan.
Further, the Equity Shares which have been locked-in for a period of three years as minimum
Promoter‘s contribution can be pledged with any scheduled commercial banks or public financial
institutions only if, in addition to fulfilling the aforesaid requirements, the loan (for which the Equity
Shares are pledged) is towards financing one or more objects of this Issue. However, as on date of the
Red Herring Prospectus, none of the Equity Shares held by our Promoter have been pledged to any
person, including banks and financial institutions
In terms of undertaking executed by our promoters, Equity shares forming a part of promoter’s
contribution subject to lock-in will not be disposed/sold/transferred by our promoters during that period
starting from the date of filling of the Draft Red Herring Prospectus with SEBI till the date of
commencement of lock-in period as stated in the Draft Red Herring Prospectus.
50
11.Till date, no Equity Shares have been allotted pursuant to any scheme approved under section 391394 of the Companies Act, 1956.
12.None of our Equity Shares have been issued out of revaluation reserve of fixed assets.
13.Our Company does not have any Employee Stock Option Scheme /Employee Stock Purchase Plan for
our employees and we do not intend to allot any shares to our employees under Employee Stock
Option Scheme / Employee Stock Purchase Plan from the proposed issue. As and when, options are
granted to our employees under the Employee Stock Option Scheme, our Company shall comply with
the SEBI (Employee Stock Option Scheme and Employees Stock Purchase Plan) Guidelines 1999.
Our Company shall ensure that transactions in the Equity Shares by our Promoters and our Promoter
Group between the date of registering the Red Herring Prospectus with the RoC and the Bid/Issue
Closing Date shall be reported to the Stock Exchanges within Twenty-four hours of such transaction.
14.None of our Promoter, Promoter Group Entities, Directors or the relatives have financed the purchase
of the Equity Shares of our Company by any other person or entity other than in normal course of
business of any such entity/individual or otherwise during the period of six months immediately
preceding the date of filing the Draft Red Herring Prospectus with SEBI.
15. Our Company, Our Promoter, Our Directors and the BRLMs to this issue have not entered into any
buy-back, standby or similar arrangements with any person for purchase of our Equity Shares issued
by our Company through the Draft Red Herring Prospectus.
16. An over-subscription to the extent of 10% of the net offer to public can be retained for the purpose of
rounding off to the nearest multiple of allotment lot, while finalizing the Basis of Allotment.
Consequently, the actual allotment may go up by a maximum of 10% of the Issue, as a result of
which, the post-issue paid up capital after the Issue would also increase by the excess amount of
allotment so made. In such an event, the Equity Shares held by the Promoter and subject to lock- in
shall be suitably increased; so as to ensure that 20% of the Post Issue paid-up capital is locked in.
17. In case of over-subscription in all categories, upto 50% of the Issue shall be available for allocation
on a proportionate basis to Qualified Institutional Buyers (including specific allocation of 5% within
the category of QIBs for Indian Mutual Funds). Further a not less than 15% of the Net Issue to the
Public shall be available for allocation on a proportionate basis to Non-Institutional Bidders and not
less than 35% of the Issue shall be available for allocation on a proportionate basis to Retail
Individual Bidders, subject to valid Bids being received at or above the Issue Price.
18. Under subscription, if any, in the Qualified Institutional Buyers Portion, Non-institutional Portion and
Retail Portion shall be allowed to be met with spill over from the other categories, at the sole
discretion of our Company and BRLMs. However, if the aggregate demand by Mutual Funds is less
than 5% of QIB Portion, the balance share available for allocation in the Mutual Fund Portion will first
be added to the QIB Portion and be allocated proportionately to QIB Bidders.
19. As on the date of filing of this Draft Red Herring Prospectus with SEBI, the entire issued share
capital of our company is fully paid-up. The Equity shares offered through this Public Issue will be
fully paid up.
20. In terms of Regulation 40 of the SEBI Regulations, locked in Equity Shares held by the promoters
may be transferred to and amongst the promoters/promoter group or to a new promoter or person in
control of our company subject to continuation of the lock-in in the hand of the transferees for the
remaining period and compliance with the SEBI (Substantial Acquisition of Shares and Takeover)
Regulations, 2011 as applicable.
51
21. Equity Shares held by persons other than Promoter’s, which are locked-in as per the provisions of
Regulation 37 of SEBI ICDR Regulation may be transferred to any other person holding shares prior
to the issue, subject to continuation of lock-in with the transferees for the remaining period and
compliance with the SEBI Takeover Regulations, as applicable.
22. As on the date of this, DRHP, none of the shares held by our Promoters/Promoters group are
pledged with any financial institutions or banks or any third party as security for repayments of
loans.
23. The Equity Shares which are subject to lock-in shall carry the inscription ‘non-transferable’ and lockin period and the non-transferability of Equity Shares shall be intimated to the depositories namely
NSDL and CDSL. The details of lock-in of the Equity Shares shall also be provided to the Designated
Stock Exchange before the listing of the Equity Shares.
24. The BRLMs and their associates do not hold any Equity Shares in our Company.
25. Our Company has not made any public issue since incorporation.
26. There will be only one denomination of the Equity Shares of our Company unless otherwise
permitted by law, our Company shall comply with such disclosure, and accounting norms as may be
specified by SEBI from time to time.
27. There would be no further issue of capital whether by way of issue of bonus shares, preferential
allotment, and rights issue or in any other manner during the period commencing from submission of
the Draft Red Herring Prospectus with SEBI until the Equity Shares issued through the Prospectus
are listed or application moneys refunded on account of failure of Issue.
28. Our Promoters and members will not participate in the Issue.
29. Our Company has not raised any Bridge loan against the proceeds of the Issue.
30. As on the date of filing of the Draft Red Herring Prospectus with SEBI, there are no outstanding
warrants, options or rights to convert debentures, loans or other financial instruments into our Equity
Shares.
31. A Bidder cannot make a Bid for more than the number of Equity Shares being issued through this
Issue, subject to the maximum limit of investment prescribed under relevant laws applicable to each
category of investor.
32. No payment, direct or indirect in the nature of discount, commission, and allowance or otherwise
shall be made either by us or our Promoters to the persons who receive allotments, if any, in this
issue.
33. We presently do not have any intention or proposal to alter our capital structure for a period of Six (6)
months from the date of opening of the Issue, by way of split/consolidation of the denomination of
Equity Shares or further issue of Equity Shares (including issue of securities convertible into or
exchangeable, directly or indirectly, for our Equity Shares) except that if we acquire companies/
business or enter into joint venture(s), we may consider additional capital to fund such activities or to
use Equity Shares as a currency for acquisition or participation in such joint ventures.
34. The Equity Shares would be issued and traded on BSE and NSE in dematerialized form. Hence the
market lot of the Equity Shares is 1 (one).
35. We have 7 shareholders as on the date of filing of the Draft Red Herring Prospectus.
52
SECTION–IV – PARTICULARS OF THE ISSUE
OBJECTS OF THE ISSUE
The object of the Issue is to raise financial resources for:Sr. No
1.
2.
3.
4.
5.
Objects
Setting up unit of Gold Refinery Unit
Repayment of Unsecured loans.
Augmenting Working Capital Resources
General Corporate Purposes
Public Issue Expenses
The other objects of the issue also include listing of shares of our company additionally on BSE and NSE.
We believe that listing on BSE and NSE will enhance our visibility and brand name and enable us to avail
of future growth opportunities.
The main object and objects incidental or ancillary to the main objects set out in our Memorandum enable
us to undertake our existing activities and the activities for which the funds are being raised by us through
the Issue.
Our Company intends to utilize the proceeds of the Issue, after deducting the Issue related expenses
which is estimated at ` [] Crores (“Net Proceeds”) for financing the above-mentioned objects. The Issue
expenses, if any, paid out of the internal accrual will be replenished by the proceeds of the Issue.
Cost of Project and Means of Finance:The Funds Requirement of the Object mentioned above are as follows:Sr. No.
1.
2.
3.
4.
5.
(` In crores)
Amount
03.60
71.09
54.00
[]
[]
Objects
Setting up of Gold Refinery Unit
Repayment of unsecured loan from ex partners
Augmenting Working Capital Resources
General Corporate Purposes
Public Issue Expenses
Means of Finance
(` In crores)
Sr. No.
1.
2.
Means of Finance
Proceeds of the Issue
Internal Cash Accruals
Total
Amount
[]
[]
The fund requirement and deployment are based on internal management estimates, vendors’ quotations
and have not been appraised by Bank or Financial Institution.
In case of variations in the actual utilization of funds earmarked for the purposes set forth above,
increased fund requirements for a particular purpose may be financed by surplus funds, if any, available
in respect of the other purposes for which funds are being raised in the Issue.
No part of the Issue proceeds will be paid by us as consideration to our Promoters, Directors, Key
Management Personnel except in the normal course of business.
53
In case of a shortfall in the Net Proceeds, we may explore a range of options including utilizing our
internal accruals, and/or seeking additional debt from existing and or other lenders.
We may have to revise our expenditure and fund requirements as a result of variations in the cost
structure, changes in estimates and external factors, which may not be within the control of our
management. This may entail rescheduling, revising or canceling the planned expenditure and fund
requirements and increasing or decreasing the expenditure for a particular purpose from its planned
expenditure mentioned below at the discretion of our management. In addition, the estimated dates of
completion of the Objects of the Issue as described herein are based on management’s current
expectations and are subject to change due to various factors including those described above, some of
which may not be in our control. Accordingly, the Net Proceeds of the Issue would be used to meet
all or any of the uses of the funds described herein.
We propose to meet our expenditure towards the Objects of the Issue out of the proceeds of the Issue.
As per, Clause VII C of Part A of Schedule VIII of the ICDR Regulations (which requires firm
arrangements of finance through verifiable means for 75% of the stated means of finance, excluding the
amount to be raised through the proposed issue) does not apply.
Details of Project
1. Setting up Gold Refinery Unit
C Mahendra Info Jewels Limited is currently involved in manufacturing of diamond studded jewellery in
Seepz , Mumbai for export market. The manufacture of gold jewellery will always generate scrap material,
whether made by traditional techniques in a workshop or by mass manufacture in a factory. Investment
casting sprues and “webbing“ strip from stamping are two obvious examples of this, where the quality,
i.e., alloy composition and cleanliness, are known. The efficient recovery of scraps and wastes in gold
jewellery manufacture is a vital component of a profitable jewellery manufacturing business, irrespective
of whether it is a large factory or small, traditional workshop. Gold and other precious metals “lost“ in the
manufacturing process can be a significant cost factor that impacts product cost and business
competitiveness. Much of the scrap generated in production can be cleaned and recycled, but
contaminated scrap and other wastes need to be collected and refined back to pure gold to recover the
value of the precious metal. Such scraps and wastes need to be pre-treated before refining to reduce
costs and maximize recovery of precious metals. we have decided to put up independently operating full
scale Precious Metal Refinery ( Refining Capacity :- 1000 kgs of pure metal per month ) which will be
used for captive usage as well as to cater other Jewelry establishments located in the SEEPZ
Our Company intends to utilize ` 3.60 crores for setting up Gold Refinery Unit at Plot No 16(P), 17,28 &
29(P) SEEPZ-SEZ, Andheri (E) , Mumbai. A detailed break- up of the fund requirement for setting up
aforesaid project is tabularized below
(` in crores)
Sr.
Particulars
Basis of estimation
Amount
No
1. Refining Tumbler Plant for 10 Kg*
Quotation Received from EUrotecnichesrl
1.22
( Qty 4)
2. Plant Accessories*
Quotations received from Indutherm
0.14
3.
Tilting Furnace TF 1200 including Quotations received from Indutherm
0.18
parts for installation*
4.
Granulating Machine GU1000 D* Quotations received from Indutherm
0.30
with vacuum graining System
4.
Laboratory, Measuring Instruments Estimated by Management
0.50
and Material Handling Equipments
5
Furniture and Fixtures
Quotation received from Shyam Furniture
0.21
dated 01.03.2012
6
Health and Safety Equipments
Estimated by Management
0.05
54
7
8
Effluent Treatment Plant
Fabrication work for Main process
area, Acid Room, Laboratory,
Burnout to Boiler ,Air circulation
system and ETP plant
TOTAL
Estimated by Management
Quotation received from Manas Fabrication
dated 24.02.2012
0.80
0.20
3.60
* Quotations received in Euro have been converted at ` 68.46 per Euro as on 23rd March, 2012.
(www.oanada.com)
Implementation Schedule
Sr. No
Particular
1.
2.
3.
4.
Plant and Machineries
Furniture and Fixtures
Trial Run
Commercial Production
Commencement Completion Date
Date
December 2012
March 2013
December 2012
March 2013
April 2013
April 2013
2. Repayment of Unsecured Loan
The erstwhile partners of the partnership firm have converted their partners capital in the form of
unsecured loans repayable by the remaining partners. The partnership firm was converted in to
limited company and the company has to repay the unsecured loan to partners as per the
retirement deed executed on 20th May,2009. The details of unsecured loan outstanding as on the
date of retirement is as follow.
(` in crores)
Sr.No. Name of Partner
Amount of Capital
1
2
3
4
5
6
C. Mahendra International limited
Mahendra C. Shah
Champak K.Mehta
Paras C. Mehta
Samir P.Shah
Suresh K.Mehta
32.55
3.95
3.81
0.80
0.78
0.80
7
8
9
10
Sandeep.M.Shah
Praveen C.Shah
Kanu C. Shah
Praveen K.Mehta
0.80
0.96
1.00
0.93
11
Prakash K.Mehta
Total
1.06
47.44
The present outstanding loan to be paid to the unsecured loan creditors as on February 28, 2012
who were the partners of the erstwhile partnership firm is as follow.
(` in crores)
Sr.No.
Name of Partner
Amount of Capital
1
C. Mahendra International limited
5.20
2
Mahendra C. Shah
3.95
3
Champak K.Mehta
3.81
4
Paras C. Mehta
0.80
5
Samir P.Shah
0.78
55
6
7
8
9
10
11
12
13
Suresh K.Mehta
Sandeep.M.Shah
Praveen C.Shah
Kanu C. Shah
Praveen K.Mehta
Prakash K.Mehta
Mahendra C. Shah
Champak K.Mehta
Total
0.80
0.80
0.96
1.00
0.93
1.06
25.50
25.50
71.09
The company has to make the payment of ` 98.43 crores as per the retirement deed executed on
20th May, 2009 to all the partners. Out of the total liability of ` 98.43 crores the company has
already made payment of ` 27.36 crores. The additional payment to be made to Mahendra C.
Shah and Champak K, Mehta was against the acquisition of 10, 50,000 equity shares of C.
Mahendra Jewels Private Limited. However the C. Mahendra Jewels Private limited is going to be
amalgamated with Minal Industries Limited and as per the Scheme of amalgamation submitted to
to the Mumbai High court and Mumbai Stock exchange the exchange ratio is 40 Equity shares of
Minal Indusites Limited having face value of ` 2/- each against the One Equity share of C.
Mahendra Jewels Private limited having face value of ` 10/- each. The total paid up capital of
Minal industries Limited post amalgamation will be 19,19,00650 Equity shares of ` 2 each and
out of that the C.Mahendra Infojewels Limited will be holding 4,20,00,000 shares representing
21.89 % of Post amalgamation Equity share capital of Minal Industries Limited.
3. Augmenting working capital Resources
The company operates in industry sector where the working capital requirement is intensive. In jewellery
industry the stock holding and credit period to be given to the clients are major components of working
capital requirement. As on 30th September, 2011 the company’s combined working capital limit with
Bank of India and Union Bank of India consists of ` 12.00 crores. As of 30th September, 2011 the
outstanding working capital limit was ` 10.90 crores. For further details of working capital limit sanctioned
by the banks, see section Titled “Financial indebtedness” on page 161 of Draft Red Herring
Prospectus.
Basis of Estimation of Working capital requirement
Sr. No.
1
2
3
4
1
2
Particulars
As at September 30,2011 (` in
Crores )
Current Assets and Loans and
Advances
Inventories
Sundry debtors
Loans and Advances
Cash and Bank balance
Total Current assets and Loans and
Advances ( A)
Current liabilities
Sundry Creditors for goods
Provisions
Total Current Liabilities ( B)
Net Working Capital ( A-B)
Less : Bank Finance
56
19.18
256.01
25.17
0.41
300.77
179.68
2.56
182.24
118.53
10.90
107.63
Own Funds ( Unsecured Loans+
Internal Cash Accruals + Share
Capital
The details of estimated working capital requirement as at 31st March,2013 and funding of
the same :
Sr. No.
1
2
3
1
2
Particulars
Current Assets and Loans and
Advances
Inventories
Sundry debtors
Loans and Advances
Total Current assets and Loans and
Advances ( A)
Current liabilities
Sundry Creditors for goods
Creditors for Expenses
Total Current Liabilities ( B)
Net Working Capital ( A-B)
Less : Bank Finance
Total requirement
Own Funds ( Unsecured Loans+
Internal Cash Accruals + Share
Capital
Part of the issue proceeds
As at March 31,2013 (` in crores)
47.12
197.26
30.00
274.38
84.82
2.75
87.57
186.81
25.00
161.81
107.81
54.00
Assumptions for Working Capital requirement
Sr. No.
1
2
3
4
Particulars
Holding period
( in No of days)
Inventories
Sundry debtors
Sundry Creditors for goods
Creditors for Expenses
50
180
90
30
General Corporate Purpose
We, in accordance with the policies set up by the Board will have flexibility in applying the net proceeds of
the Issue, after the aforesaid objects are met, for general corporate purposes including, but not restricted
to meeting contingencies for any cost overrun in the expansion project, strategic initiatives, expanding
into new geographies, strengthening of market capabilities, future projects and meeting exigencies which
we in the ordinary course may not foresee. As on the date of this Draft Red Herring Prospectus, we have
not entered into any commitment for any strategic initiatives. Our management, in accordance with the
policies of our Board, will have flexibility in utilizing the proceeds earmarked for general corporate
purposes.
Public Issue Expenses
The Issue related expenses include, among others, lead management, underwriting and selling
commissions, IPO Grading fees, printing, distribution and stationery expenses, advertising and marketing
57
expenses, and other expenses including Registrar, Depository, listing and legal fees. All expenses with
respect to the Issue will be borne by the Company. The estimated Issue expenses* are as follows:
(` in Crores)
S. No.
Description
Amount
in Percentage
Percentage
Crores
of
Total of
Total
Issue
Issue Size
Expenses
1.
Lead Management fees
[]
[]
[]
2.
Underwriting and selling commission
[]
[]
[]
(including commission to SCSBs for
ASBA Applications)
3.
Registrar’s fees
[]
[]
[]
4.
Advertising and marketing expenses
[]
[]
[]
5.
Printing and distribution expenses
[]
[]
[]
6.
IPO Grading expenses
[]
[]
[]
7.
Advisors
[]
[]
[]
8.
Bankers to the Issue
[]
[]
[]
9.
Others (SEBI filing fees, bidding software
[]
[]
[]
expenses, depository charges, listing)
Total
[]
[]
[]
* To be filled at the time of filling Red Herring Prospectus
Deployment of Funds
We have incurred the following expenditure on Object of the Issue till 28th February, 2012. The same has
been certified by R.H.Modi & co, Chartered Accountants, vide their certificate dated 10th March,2012.
(` in crores)
Sr.
Deployment of Funds
Amount
No.
1. Preliminary and Pre Operative Expenses
0.07
Total
0.07
Sr.
No.
(` in crores)
Amount
sources of Funds
1. Internal Cash Accruals
Total
0.07
0.07
Details of Balance Fund Deployment
The overall cost of the proposed project and the proposed year wise break up of deployment of funds is
as under:
(` in crores)
Project Details
Sr. No.
Already
Incurred (`)
2012-13
st
1
Qtr
1.
2.
3.
4.
Setting up of Gold
Refinery Uniti
Repayment
of
Unsecured Loans
Augmenting working
capital requirement
General Corporate
Purpose
nd
Total
rd
2
Qtr
th
3 Qtr
4 Qtr
[]
[]
[]
[]
4.45
4.45
[]
[]
[]
[]
71.09
71.09
[]
[]
[]
[]
54.00
54.00
[]
[]
[]
[]
[]
[]
58
5.
Public
expenses
Total
Issue
[]
[]
[]
[]
[]
[]
[]
[]
[]
[]
[]
[]
Means of finance
The management, in accordance with the policies set up by the Board, will have flexibility in deploying the
Net Proceeds, as well as the discretion to revise its business plan from time to time and consequently the
funding requirement and deployment of funds may also change. This may include rescheduling the
proposed utilisation of Net Proceeds and increasing or decreasing expenditure for a particular object visà-vis the utilisation of Net Proceeds.
In the event of significant variations in the proposed utilisation, approval of the shareholders of the
Company shall be duly sought. In case of variations in the actual utilisation of funds earmarked for the
purposes set forth below, increased fund requirements for a particular purpose may be financed by
surplus funds, if any, available in respect of the other purposes for which funds are being raised in this
Issue. If surplus funds are unavailable, the required financing will be through internal accruals and debt.
Any excess amount raised over and above the project cost as estimated, including any amount realised
as proceeds of the Issue, will be used to meet any additional contingency for the Objects or for general
corporate purposes. In the event the Net Proceeds fall short of the investment required for the proposed
Objects and the Issue expenses, the same will be funded from the internal accruals of the Company or
through banks as and when required.
Interim Use of Proceeds
The management, in accordance with the policies established by the Board of Directors, will have the
flexibility in deploying the Net Proceeds received by us. Pending utilization for the purposes described
above, we intend to invest the funds in high quality interest/dividend bearing liquid instruments including
money market mutual funds and deposits with banks for the necessary duration and other fixed and
variable return instruments.
Monitoring of Utilisation of Funds
As the size of the Issue will not exceed ` 50,000 lakhs, the appointment of Monitoring Agency would not
be required as per Regulation 16 of the ICDR Regulations. The Audit Committee appointed by our Board
of Directors will monitor the utilization of the proceeds of the Issue. Our Company will disclose the details
of the utilization of the Issue proceeds, including interim use, under a separate head in our financial
statement specifying the purpose for which such proceeds have been utilized or otherwise disclosed as
per the disclosure requirements of our listing agreements with the Stock Exchanges and in particular,
Clause 49 of the Listing Agreement. The statement shall be certified by our Statutory Auditors. Further, in
terms of clause 43A of the Listing Agreement, we will furnish to the Stock Exchanges on a quarterly
basis, a statement indicating material deviations, if any, in the use of proceeds from the objects stated in
the Red Herring Prospectus. Further, this information shall be furnished to the Stock Exchanges along
with the interim or annual financial results submitted under clause 41 of the Listing Agreement and shall
be published in the newspapers simultaneously with the interim or annual financial results, after placing it
before the Audit Committee in terms of clause 49 of the Listing Agreement.
For risks associated with our proposed utilization of the Net Proceeds of the Issue, see Risk Factors on
page 14 of this Draft Red Herring Prospectus.
59
BASIS FOR ISSUE PRICE
Investors should read the following summary with the section titled Risk Factors and the details about our
Company under the section titled "Business Overview” and its financial statements under the section titled
“Financial Information " beginning on pages 14, 87 and 126 respectively of this Draft Red Herring
Prospectus. The trading price of the Equity Shares of our Company could decline due to these risks and
the investor may lose all or part of his investment.
The Issue Price will be determined by the Company in consultation with the BRLM on the basis of the
assessment of market demand for the Equity Shares by the Book Building Process. The face value of the
Equity Shares is ` 10 each and the Issue Price is [x] times of the face value at the lower end of the Price
Band and [x] times the face value at the higher end of the Price Band.
Qualitative Factors
x Technically skilled Promoter and experienced management team
x Use of Modern technology and Quality standards
x Cost efficient sourcing and locational advantage
x Value added service tagging, padding & Bagging
x Direct marketing to the chain stores
x Experienced management team and motivated employee
For a detailed discussion on the qualitative factors which form the basis for computing the price, please
refer to sections titled " Business Overview” and "Risk Factors" beginning on pages 87 and 14
respectively of this Draft Red Herring Prospectus.
Quantitative Factors
Presented in this section is derived from our Company’s financial statements prepared in accordance with
Indian GAAP. Some of the quantitative factors, which form the basis for computing the price, are as
follows:
1. Weighted Average Earning per Share (EPS) of Face Value of ` 10/Year ended
Weight
EPS (`)
31st March 2009*
5.64
1
31st March 2010*
0.84
2
31st March 2011
3.57
3
Weighted average Earnings Per
3.01
Equity Share
Quarter ended September 30,
3.83
2011
1. The status of the Company prior to 10 August 2010 was that of a partnership firm. Hence, EPS
and NAV per share have been computed for all the periods/ years prior to 31 March 2011 by
considering the number of shares outstanding as at 10 August 2010
2. The face value of each equity share is ` 10.
3. Earnings per share calculations are in accordance with the Accounting Standard 20 “Earnings per
Share” issued by Chartered Accountants of India.
3. Price Earnings ratio (P/E ratio) in relation to the Issue Price of ` per share
Particulars
Based on EPS for March 31, 2011 of
Based on weighted average EPS of `
Issue Price of ` per share
[x]
[x]
60
Particulars Industry
Highest( Asian Star Co)
Lowest (Su-Raj Diamond)
Industry Composite
Source: Capital Market-Jan 09-22, 2012
4. Return on Net worth
Year ended
March 31, 2009
March 31, 2010
March 31, 2011
P/E
41.1
2.2
14.5
RONW (%)
Weight
72.11
3.25
1
2
3
26.21
Weighted Average RONW
Half Year Ended September 30,
2011
26.18
21.95
5. Minimum Return on Increased Net Worth Required to Maintain Pre-Issue EPS The minimum
return on increased net worth required to maintain pre-Issue EPS of `[x] is [x]% at the lower end
of the price band and [x]% at the higher end of the price band.
6. Net Asset Value (NAV) per share (`) as per our financial information
Particulars
As on March 31, 2011
Pre-Issue (as on September
30,2011
Issue Price
Post Issue
NAV per share (`)
13.62
17.45
[x]
[x]
Note:
(i) Issue Price and the NAV after the Issue will be determined on conclusion of Book Building
Process.
(ii) NAV is the net worth as divided by number of shares outstanding as at September 30, 2011.
7. Comparison with Industry Peers and Industry average we have chosen the companies
which we believe are our peers. The comparison of Accounting Ratios with Industry Peers
is as follows:
Name
RONW (%)
FV (`)
EPS (`)
NAV per share (`)
Thangmayil Jewellery Limited
10
22.84
31.90
71.58
Shree Ganesh Jewellery
10
43.48
24.65
218
House Limited
Renaissance Jewellery
10
17.30
12.60
137.23
Source: Company Annual Report
*All comparisons are as per the Financials of the Issuer for the year ended March 31, 2011
P/E
6.57
2.30
4.62
8. The face value of our Equity Shares is ` 10 and the Issue Price is ` [x] i.e., [x] times of the
face Value.
61
The Issue Price of ` [] has been determined by our Company in consultation with the BRLM, on
the basis of assessment of market demand for the Equity Shares by way of Book Building and is
justified on the basis of the above factors. The BRLM believes that the Issue Price of ` [x]is
justified in view of the above qualitative and quantitative parameters. Investors should read the
above mentioned information along with section titled "Risk Factors" and “Financial Information "
beginning on pages 14 and 126 respectively of this Draft Red Herring Prospectus, to have a more
informed view. The trading price of the Equity Shares of our Company could decline due to the
factors mentioned under the section titled "Risk Factors"
62
STATEMENT OF TAX BENEFITS
The below Statement of Tax Benefits sets out the provisions of law in a summary manner only and
is not a complete analysis or listing of all potential tax consequences of the purchase, ownership
and disposal of Equity Shares. The statements made are based on the tax laws in force and as
interpreted by the relevant taxation authorities as of date. Investors are advised to consult their
tax advisors with respect to the tax consequences of the purchase, ownership and disposal of
Equity Shares.
To,
The Board of Directors,
C. Mahendra Infojewels Limited
214A, Paradise Complex,
Sayajiganj,
Vadodra-
Dear Sirs,
We hereby report that we have reviewed the attached annexure which states the possible tax benefits
available to C. Mahendra Infojewels Limited (‘the Company’) and its shareholders under the Income Tax
Act, 1961 and the Wealth Tax Act, 1957 presently in force in India. Several of these benefits are
dependent on the Company or its shareholders fulfilling the conditions prescribed under the relevant
provisions of the relevant tax laws. Hence, the ability of the Company or its shareholders to derive the tax
benefits is dependent upon fulfilling such conditions, which based on the business imperatives, the
Company or shareholders as the case may be, may or may not choose to fulfill.
The benefits discussed in the attached statement are not exhaustive. This statement is only intended to
provide general information to the investors and is neither designed nor intended to be a substitute for
professional tax advice. In view of the individual nature of the tax consequences and the changing tax
laws, each investor is advised to consult his or her own tax consultant with respect to the specific tax
implications arising out of their participation in the issue.
The Direct Taxes Code Bill, 2010 (‘DTC Bill’) has been presented on 30 August 2010 in the Lok Sabha. It
is proposed that the DTC Bill would be effective from 1 April 2012 and would substitute the existing
Income-tax Act, 1961 and the Wealth-tax Act, 1957. The DTC Bill be referred to a Parliamentary Standing
Committee for further deliberations and would need to be approved by the Parliament and the H’ble
President of India before becoming operative as law. In view of the above, the provisions contained in the
DTC Bill have not been considered in this Statement of Tax Benefits.
We do not express any opinion or provide any assurance as to whether:
i.
ii.
the Company or its shareholders will continue to obtain these benefits in future; or
the conditions prescribed for availing the benefits have been / would be met with.
The contents of the enclosed statement are based on information, explanations and representations
obtained from the Company and on the basis of our understanding of the business activities and
operations of the Company.
Our views expressed herein are based on the facts and assumptions indicated to us. No assurance is
given that the revenue authorities/ courts will concur with views expressed herein. Our views are based
on the existing provisions of law and its interpretation, which are subject to change from time to time. We
do not assume responsibility to update the views consequent to such changes. The views are exclusively
63
for the use of C Mahendra Infojewels Limited. We shall not be liable to C Mahendra Infojewels Limited for
any claims, liabilities or expenses relating to this assignment except to the extent of fees relating to this
assignment, as finally judicially determined to have resulted primarily from bad faith or intentional
misconduct. We will not be liable to any other person in respect of this statement.
For R. H. Modi & Co.,
Chartered Accountants
(Rajendra Modi)
Proprietor
Membership No.: 37643
Firm Registration No. 106486W
Mumbai
Dated: March 10, 2012
64
ANNEXURE TO STATEMENT OF POSSIBLE TAX BENEFITS AVAILABLE TO C. MAHENDRA
INFOJEWELS LIMITED (‘THE COMPANY’) AND ITS SHAREHOLDERS:
I]
Under the Income Tax Act, 1961 (‘the Act’):
A) BENEFITS TO THE COMPANY
1.
Deduction under section 10AA of the Act:
a. Vide approval letter no SSEZ/II/23/2010-11/800 dated 30th August,2010 from the
Development Commissioner, Surat Special Economic Zone. The Company has set up
unit in Special Economic Zone, unit no 427 at plot no. 250 at Sachin, Surat, Gujarat, for
manufacturing of Jewellery and trading of diamond. The company has commenced
manufacturing / trading of diamonds and jewellery in the aforesaid unit.
The afore said unit of the company is eligible to claim the deduction under section 10AA
of the Act in respect of its activities of cutting and polishing of diamonds and manufacture
of jewellery as follows after fulfilling the conditions under various Acts:
Years of deduction
Deduction
First five consecutive assessment years
beginning with the assessment year relevant
to the previous year in which the Unit begins
to manufacture or produce such articles or
things
Next five consecutive assessment years
Next five consecutive assessment years
100% of the profits and gains derived
from the export of articles or things
50% of such profit
So much of the amount not exceeding
50% of the profit as is debited to the
profit and loss account of the previous
year in respect of which the deduction
is to be allowed and credited to
Special
Economic
Zone
Reinvestment
Reserve
Account
(‘SEZRRA’)
b. Vide approval letter No SEEPZ/NUS/APL/GJ-245/99/2738 dated 17.3.2000 from the
Development Commissioner, SEEPZ-SEZ. The Company has set up a unit II,
situated at Plot no 16(p),17,28 &29, SEEPZ, Andheri (E), Mumbai 400093 for
manufacturing and export of studded Gold jewellery. The company has commenced
manufacturing and export of jewellery in the aforesaid unit.
The aforesaid unit is eligible to claim the deduction under section 10AA of the Act in
respect of its activities of cutting and polishing of diamonds and manufacture of jewellery
as follows after fulfilling the conditions under various Acts:
Years of deduction
Deduction
First five consecutive assessment years
beginning with the assessment year relevant
to the previous year in which the Unit begins
to manufacture or produce such articles or
things
100% of the profits and gains derived
from the export of articles or things
65
Next five consecutive assessment years
Next five consecutive assessment years
50% of such profit
So much of the amount not exceeding
50% of the profit as is debited to the
profit and loss account of the previous
year in respect of which the deduction
is to be allowed and credited to
Special
Economic
Zone
Reinvestment
Reserve
Account
(‘SEZRRA’)
2. Deduction under section 35D of the Act:
Under section 35D of the Act, the Company is eligible to claim amortization of defined
preliminary expenses, subject to limits specified in sub-section (3) of the said section.
3. Depreciation benefits:
Under section 32 of the Act, the Company is entitled to claim depreciation at the prescribed
rates on specified tangible and intangible assets used by the Company for the purpose of its
business and subject to other conditions listed in the Act.
4.
Minimum Alternate Tax (‘MAT’) and Credit for the same:
The Company would be required to pay tax @ 18.5% (plus applicable surcharge and cess)
on its book profits under the provisions of section 115JB of the Act in case where tax on its
‘total income’ [as term defined under section 2(45) of the Act] is less than 18.5% of its ‘book
profits’ (as term defined under section 115JB of the Act). Such tax is referred to as MAT.
The difference between the MAT paid for any assessment year and the tax on its total
income payable for that assessment year shall be allowed to be carried forward as ‘MAT
credit’. The MAT credit shall be utilized to be set off against taxes payable on the total income
in the subsequent assessment years computed in accordance with the provisions other than
Section 115JB. However, it can be carried forward upto 10 assessment years succeeding the
assessment year in which such MAT was paid.
5.
Dividend Distribution Tax (‘DDT’):
Dividend declared/distributed/paid by the Company is subject to DDT @ 15% (plus applicable
surcharge and education cess). As per section 115-O(1A), for the purpose of calculating
DDT, the aforesaid amount of dividend shall be reduced by the amount received by the
Company from its immediate subsidiaries by way of dividend during the FY provided the
subsidiaries have paid DDT.
6.
Dividend exempt under section 10(34) and 10(35) of the Act:
Dividend (whether interim or final) received by the Company from its investment in shares of
another domestic company would be exempt as per the provisions of section 10(34) read
with section 115O of the Act. Further, income received from units of a Mutual Fund specified
under section 10(23D) of the Act would also be exempt as per the provisions of section
10(35) of the Act.
7.
Computation of Capital Gain
i)
Income arising on transfer of equity shares of a company or units of an equity oriented
fund held by the Company will be exempt under section 10(38) of the
Income-Tax Act
if the said asset is a long-term capital asset (i.e. held for more
than 12 months) and
securities transaction tax has been charged on the said transaction. However, the said
66
exemption will not be available to the company while computing the book profit and
payable under section 115JB of the IncomeTax Act.
ii) The long-term capital gains arising to the Company from the transfer of listed securities
or units, as defined, not covered under para 5 above shall be chargeable to tax at the
rate of 20% (plus applicable surcharge and education cess) of the
capital
gains
computed after indexing the cost of acquisition or at the rate of 10% (plus applicable
surcharge and education cess) of the capital gains computed
before indexing the cost
of acquisition, whichever is lower.
iii) The long-term capital gains not covered under para (i) and (ii)5 above shall be
chargeable to tax at the rate of 20% (plus applicable surcharge and education cess) of
the capital gains computed after indexing the cost of acquisition / improvement.
iv) Short-term capital gains arising on transfer of equity shares or units of an oriented fund
held by the Company will be chargeable to tax at the rate of 15% (plus applicable
surcharge and education cess) as per the provisions of section 111A of the Income-Tax
Act, if securities transaction tax has been charged on the said transaction.
8.
Exemption of capital gains arising from income tax:
In accordance with and subject to the conditions, including the limit of investment of Rs. 50
lakhs, and to the extent specified in section 54EC of the Income-Tax Act, capital gains
arising on transfer of long-term capital assets of the Company not covered under para 6
above shall be exempt from capital gains tax to the extent of amount invested, if investment
in specified securities are made within six months from the date of transfer of the original
asset in the purchase of long-term specified assets. The bonds specified for this section are
bonds issued by NHAI and REC.
9.
Carry forward of Losses
i) Section 72 of the Income-Tax Act provides that the business loss computed in accordance
with the provisions shall be carried forward to the following assessment year to be set off
against the profits and gains of business and profession and the balance shall be allowed
to be carried forward for next 8 assessment year subject to the provisions of the IncomeTax Act. Unabsorbed depreciation, if any, for any assessement year can be carried
forward and set off against any source of income of subsequent assessement years as
per section 32 of the Income-Tax Act.
ii) As per section 74 of the Income-Tax Act short-term capital loss suffered during the year is
allowed to be set-off against short-term as well as long-term capital
gains of the
said year. Balance loss, if any, could be carried forward for eight years for claiming set-off
against subsequent year’s short term as well as long term capital gains. Long-term capital
loss suffered during the year is allowed to be set-off against long-term capital gains.
Balance loss, if any, could be carried forward for eight years for claiming set-off against
subsequent year’s long-term capital gains.
10. As per Section 14A, no deduction shall be allowed in respect of expenditure incurred by the
assessee in relation to income which does not form part of the total income under this
Income-Tax Act.
67
B) BENEFITS TO THE RESIDENT SHAREHOLDERS:
1. Dividends exempt under section 10(34) of the Act:
Dividend (whether interim or final) received by a shareholder from investment in shares of a
domestic company would be exempt in the hands of the shareholders as per the provisions of
section 10(34) read with section 115O of the Act. However, the Company has to pay DDT on
the amount of dividend declared, distributed or paid.
2. Characterization of income:
The characterization of gains/losses, arising from sale of shares, as capital gains or business
income would depend on the nature of holding in the hands of shareholder and various other
factors.
3. Computation of capital gains:
i)
Capital assets are to be categorized into short-term capital assets and long-term capital
assets based on the period of holding. Shares held in a Company, any other listed
securities, units of UTI, units of Mutual Fund and Zero Coupon Bonds are considered as
long-term capital assets, if these are held for a period exceeding twelve months.
ii)
Section 48 of the Act, which prescribes the mode of computation of capital gains,
provides for deduction of cost of acquisition/improvement and expenses incurred in
connection with the transfer of a capital asset, from the sale consideration to arrive at the
amount of capital gains. However, in respect of long-term capital gains shareholders are
permitted to substitute the cost of acquisition/improvement with the indexed cost of
acquisition/improvement. The indexed cost of acquisition/improvement, adjusts the cost
of acquisition/improvement by a cost inflation index, as prescribed from time to time. The
indexed cost of acquisition/improvement is not available to a non-resident shareholder.
iii)
As per the provisions of section 112 of the Act, long-term capital gains are subject to tax
at a rate of 20% (plus applicable education cess). However, proviso to section 112(1) of
the Act specifies that if the long-term capital gains arising on transfer of listed securities
or units, calculated at the rate of 20% with indexation benefit exceeds the capital gains
computed at the rate of 10% without indexation benefit, then such capital gains are
chargeable to tax at the rate of 10% without indexation benefit (plus applicable
surcharge1 and education cess).
iv)
According to the proviso to clause (a) of sub-section (1) of section 112 of the Act, in case
of an individual and a Hindu Undivided Family (‘HUF’), if the total income as reduced by
the long-term capital gains is below the basic exemption limit, then the long-term capital
gains shall be reduced to the extent the total income as reduced falls short of the basic
exemption limit and the balance long-term capital gains would be charged to tax.
v)
Effective 1 October 2004, long-term capital gains arising on sale of equity shares through
recognized stock exchange, are exempt from tax under section 10(38) of the Act, subject
to Securities Transaction Tax being levied under Chapter VII of the Finance (No. 2) Act,
2004. However, long term capital gain of shareholder being a company shall be subject
to income tax computed on book profit under section 115JB of the Act.
vi)
Effective 1 October 2004, as per the provisions of section 111A of the Act, short-term
capital gains arising on sale of equity shares through recognized stock exchange (i.e. if
shares are held for a period not exceeding 12 months), are subject to tax at the rate of
15% (plus applicable surcharge1 and education cess), provided the transaction is subject
to Securities Transaction Tax being levied under Chapter VII of the Finance (No. 2) Act,
2004.
68
vii)
According to the proviso to sub-section (1) of section 111A of the Act, in case of an
individual and HUF, if the total income as reduced by the short-term capital gains is
below the basic exemption limit, then the short-term capital gains shall be reduced to the
extent the total income as reduced falls short of the basic exemption limit and the balance
short-term capital gains would be charged to tax.
viii)
Section 94(7) of the Act, provides that loses arising from the sale/ transfer of shares
within a period of three months prior to the record date and sold / transferred within three
months after such date, will be disallowed to the extent dividend income on such shares
are claimed as tax exempt.
4. Exemption of capital gains arising from income tax:
i)
As per section 54EC of the Act and subject to the conditions specified therein capital
gains arising on transfer of a long-term capital asset shall not be chargeable to tax to the
extent such capital gains are invested in certain notified bonds (not exceeding ` 50 lakhs
per FY) within six months from the date of transfer. In such a case, the cost of such
bonds will not qualify for deduction under section 80C of the Act. However, if the
shareholder transfers or converts the notified bonds into money (as stipulated therein)
within a period of three years from the date of their acquisition, the amount of capital
gains exempted earlier would become chargeable in such year. The bonds specified for
this section are bonds issued by NHAI and REC.
ii)
As per the provisions of section 54F of the Act and subject to conditions specified therein,
long-term capital gains (in cases not covered under section 10(38) of the Act) arising to
an individual or HUF on transfer of shares of the Company will be exempted from capital
gains tax, if the net consideration from such shares are used for purchase of residential
house property within a period of one year before and two years after the date on which
the transfer took place or for construction of residential house property within a period of
three years after the date of transfer, provided that the individual/ HUF should not own
more than one residential house other than the new residential house on the date of
transfer. If only part of such net consideration is invested within the prescribed period in a
residential house property, the exemption shall be allowed proportionately.
For this purpose, net consideration means full value of the consideration received or
accrued as a result of the transfer of the capital asset as reduced by any expenditure
incurred wholly and exclusively in connection with such transfer.
If the residential house in which the investment has been made is transferred within a
period of three years from the date of its purchase or construction, the amount of capital
gains tax exempted earlier would become chargeable to tax as long-term capital gains in
the year in which such residential house is transferred.
Similarly, if the shareholder purchases within a period of two years or constructs within a
period of three years after the date of transfer of capital asset, another residential house,
then the original exemption will be taxed as long-term capital gains in the year in which
the additional residential house is acquired.
5. Deduction of Securities Transaction Tax:
In case, the gain arising from sale of shares is considered as Business Income, the Securities
Transaction Tax paid will be allowed as a deduction while computing the income under the
head ‘Profits and gains of business or profession.
69
6.
Carry forward of losses
i) Section 72 of the Income-Tax Act provides that the business loss computed in
accordance with the provisions shall be carried forward to the following assessment ear to
be set off against the profits and gains of business and profession and the balance shall be
allowed to be carried forward for next 8 assessment year subject to the provisions of the
Income-Tax Act.
ii) As per Section 74 of the Income-Tax Act, short-term capital loss suffered during the
year is allowed to be set-off against short-term as well as long-term capital gains of the
said year. Balance loss, if any, could be carried forward for eight
years for claiming setoff against subsequent year’s short-term as well as longterm capital gains. Long-term
capital loss suffered during the year is allowed to be set-off against long-term capital gains.
Balance Loss, if any, could be carried forward for eight years for claiming set-off against
subsequent year’s long term capital gains.
7.
As per Section 14A, no deduction shall be allowed in respect of expenditure
incurred by the assessee in relation to income which does not form not form part of the total
income under this Income-Tax Act.
C) BENEFITS TO THE NON-RESIDENT INDIANS/ NON-RESIDENT SHAREHOLDERS:
Apart from the benefits mentioned in 1, 2, 4 & 5 of point B above
1.
Computation of capital gains:
Apart from the benefits mentioned in 3(i), 3(v), 3(vi) & 3(viii) of point B above
Section 48 of the Act, which prescribes the mode of computation of capital gains, provides for
deduction of cost of acquisition / improvement and expenses incurred in connection with the
transfer of a capital asset, from the sale consideration to arrive at the amount of capital gains.
Under first proviso to section 48 of the Act, the taxable capital gains arising on transfer of
capital assets being shares or debentures of an Indian company need to be computed by
converting the cost of acquisition, expenditure in connection with such transfer and full value
of the consideration received or accruing as a result of the transfer into the same foreign
currency in which the shares were originally purchased. The resultant gains thereafter need
to be reconverted into Indian currency. The conversion needs to be done at the prescribed
rates prevailing on dates stipulated.
As per the provisions of section 112 of the Act, long-term gains are subject to tax at a rate of
20% (plus applicable surcharge1 and education cess). Based on the judicial precedents, a
view may be taken long-term capital gains arising on transfer of listed securities or units can
be computed at the rate of 10% without indexation benefit in case of non resident shares
holders.
1
The surcharge is not applicable in case of an individual, HUF, AOP and partnership firm
from the assessment year 2010-11
2.
Special provisions relating to certain incomes of Non-Resident Indians:
As per the provisions of section 115-I of the Act, a Non-Resident Indian (‘NRI’) as defined
therein has the option to be governed by the normal provisions of the Act (as applicable to
non-resident shareholders as per para ‘C(1)’ above) or the provisions of Chapter XII-A of the
Act through appropriate declaration in the return of income. The said Chapter inter alia
entitles an NRI to the benefits stated hereunder in respect of income from shares of an Indian
company acquired, purchased or subscribed in convertible foreign exchange.
70
As per the provisions of section 115D read with section 115E of the Act and subject to the
conditions specified therein, taxable long-term capital gains arising on transfer of an Indian
company’s shares, will be subject to tax at the rate of 10% (plus applicable surcharge1 and
education cess).
As per the provisions of section 115F of the Act and subject to the conditions specified
therein, gains arising on transfer of a long-term capital asset being shares in an Indian
company would not be chargeable to tax. To avail this benefit the entire net consideration
received on such transfer needs to be invested within the prescribed period of six months in
any specified asset or savings certificates referred to in section 10(4B) of the Act. If whole or
part of such net consideration is invested within the prescribed period of six months in any
specified asset or savings certificates referred to in section 10(4B) of the Act, then such gains
would not be chargeable to tax on a proportionate basis. For this purpose, net consideration
means full value of the consideration received or accrued as a result of the transfer of the
capital asset as reduced by any expenditure incurred wholly and exclusively in connection
with such transfer. The specified asset or savings certificates in which the investment has
been made are restricted from being transferred within a period of three years from the date
of investment. In the event of such a transfer, the amount of capital gains tax exempted
earlier would become chargeable to tax as long-term capital gains in the year in which such
specified asset or savings certificates are transferred.
As per the provisions of section 115G of the Act, NRIs are not obliged to file a return of
income under section 139(1) of the Act, if:
a
Their only source of income is income from investments or long-term capital gains earned
on transfer of such investments or both; and
b
The tax has been deducted at source from such income as per the provisions of Chapter
XVII-B of the Act.
As per the provision of section 115H of the Act, when a NRI becomes assessable as a
resident in India, the provisions of the Chapter XII-A can continue to apply until such assets
are converted into money, in relation to investment made when he was a NRI. Towards this,
the NRI needs to furnish a declaration in writing to the Assessing Officer along with his return
of income.
3. Tax Treaty Benefits:
As per section 90(2) of the Act, non-resident has an option to be governed by the provisions
of the Act or the provisions of the tax treaty whichever are more beneficial. Thus, a nonresident (including NRIs) can opt to be governed by the beneficial provisions of an applicable
tax treaty.
D) BENEFITS TO THE FOREIGN INSTITUTIONAL INVESTOR (‘FIIs’):
Apart from benefits as mentioned in 1, 2, 4(i) & 5 of point B above & in 3 of point C above
1. Computation of capital gains:
Apart from the benefits mentioned in 3(i), 3(v), 3(vi) & 3(viii) of point B above:
As per the provisions of section 115AD of the Act, FIIs are taxed on the capital gains income
at the following rates:
71
Nature of Income
Rate of tax (%) *
Long-term capital gains
Short-term capital gains (referred in 111A)
Short-term capital gains (other than referred in 111A)
10
15
30
* Plus applicable surcharge and education cess
The benefits of indexation and foreign currency fluctuation protection as provided by section
48 of the Act are not available to FIIs.
If the income realized from the disposition of equity shares is chargeable to tax in India as
‘business income’, the business profits in the hands of FIIs may be subject to tax @ 40% in
case of foreign company plus surcharge and education cess. However, the benefit of DTAA
can be examined in such case.
E) BENEFITS TO THE MUTUAL FUNDS:
Apart from the benefits mentioned in 1 of point B above
Income exempt under section 10(23D) of the Act:
As per the provisions of section 10(23D) of the Act, any income of Mutual Fund registered under
the Securities and Exchange Board of India Act, 1992 or Regulations made there under, Mutual
Funds set up by public sector banks or public financial institutions and Mutual Funds authorized by
the Reserve Bank of India, would be exempt from income tax, subject to the prescribed conditions.
However, the Mutual Fund shall be liable to pay tax while distributing income to unit holders under
section 115R of the Act.
F) BENEFITS TO THE VENTURE CAPITAL COMPANIES / FUNDS:
Apart from the benefits mentioned in 1 of point B above
Income exempt under section 10(23FB) of the Act:
i)
As per the provisions of section 10(23FB) of the Act, any income of Venture Capital
Companies/Funds registered with the Securities and Exchange Board of India, which is engaged
in certain specified business, would be exempt from income tax.
ii)
As per Section 14A, no deduction shall be allowed in respect of expenditure incurred by the
assessee in relation to income which does not form not form part of the total income under this
Income-Tax Act.
II] Under the Wealth Tax Act, 1957 (‘the Wealth Tax Act’):
G) BENEFITS AVAILABLE TO ALL THE SHAREHOLDERS:
Asset as defined under section 2(ea) of the Wealth Tax Act does not include shares in companies
and hence, shares are not liable to wealth tax. The basic limit for wealth tax exemption is ` 30
lakhs from the assessment year 2010-11.
72
III]
Under the Gift Tax Act, 1958 (‘the Gift Tax Act’):
H)
Benefits available to all the shareholders
Gift made after 1st October 1998 is not liable for gift tax, and hence, gift of shares of the
Company would not be liable for gift tax.
Notes:
1
All the above benefits are as per the current tax law as amended by the Finance Act, 2011.
2
The above Statement of possible tax benefits sets out the provisions of law in a summary manner
only and is not a complete analysis or list of all potential tax consequences.
3
The stated benefits will be available only to the sole/ first named shareholder in case the share is held
by joint holders.
4
In respect of non-residents, the tax rates and the consequent taxation mentioned above shall be
further subject to any benefits available under the Double Taxation Avoidance Agreement, if any,
entered into between India and the country in which the non-resident has fiscal domicile.
5
In view of the individual nature of tax consequences, each investor is advised to consult his/ her own
tax advisor with respect to specific tax consequences of his/ her participation in the scheme.
73
SECTIO
ON V- ABOUT
T US
INDUST
TRY OVERVIIEW
Disclaime
er of IMaCS: All informattion contained
d in the encllosed contentt has been obtained
o
by IM
MaCS
from sourrces believed
d by it to be accurate and
d reliable. Allthough reaso
onable care has
h been takken to
ensure that the informa
ation herein iss true, such in
nformation is provided is trrue „as is̏ wiithout any warranty
nd, and IMaC
CS in particula
ar, makes no representatio
on of warrantty, express orr implied, as to the
of any kin
accuracy timeliness orr completeness of any such informatio
on. All informa
ation containe
ed herein mu
ust be
construed
d solely as sta
atements of opinion
o
and IM
MaCS shall not
n be liable for
fo any lossess incurred by users
from any use of this pu
ublication or itts contents.
1.
O
Overview
wofIndiaanEcono
omy Over the last five yearrs, the Indian
n Economy has experiencced significant growth with
h an average GDP
growth of close to 8.5%
% (2007-2011
1). In the fina
ancial year 20
011 (FY2011),, the Indian economy reco
overed
from the slowdown
s
in FY2009. The
e annual Grosss Domestic Product (GDP
P) growth wa
as 8.5% in FY
Y2011
as compa
ared with 6.8%
% in FY2009
9. However, GDP
G
growth rate started to
t decline aftter Q2FY2011 and
was 6.8%
% in Q2FY2012 as compare
ed to 8.87% in
n Q2FY2011.
.
F
Figure1:Qu
uarterlygrow
wthinGDP
16
6%
To
otal
Industry
14
4%
12
2%
10
0%
10% 10% 9% 10% 9% 9% 10%
8
8%
Agricultture
Servicess
9%
8% 8
8% 8%
6
6% 6%
6
6%
6%
%
9% 9% 9%
8% 8% 8%
%
7%
7%
4
4%
2
2%
0
0%
3FY07 Q1FY08
8 Q3FY08 Q1
1FY09 Q3FY09 Q1FY10 Q3FFY10 Q1FY11 Q3FY11 Q1FYY12
2
2% Q1FY07 Q3
4
4%
Sources:Cen
ntralstatisticorg
ganization(CSO
O),IMaCSAnalysiis
GDP grow
wth from “Tra
ade, hotels, trransport and communication” peaked in Q1FY2012
2 (12.8%). De
espite
having a lower growth in Q4FY2011, the growth
h rate for the quarter was among the highest
h
of all other
sectors. In Q2FY2012
2, GDP grow
wth of “Fina
ancing, insurrance, real estate
e
and business
b
servvices”
registered
d a growth ra
ate of 10.5%. “Manufacturring growth declined from 7.7% in Q1F
FY2012 to 2.7
7% in
Q2FY2012.
Table1:Grow
wthinGDPaatfactorcostbyeconom
micactivity
Sector
Q1
2010
11
Q2
2010
11
74
Q3
2010
11
Q4
2010
11
Q1
2011
12
Q2
2011
2
12
Agriculture,forestryandfishing
Miningandquarrying
Manufacturing
Electricity,gasandwatersupply
Construction
Trade,hotels,transportand
communication
Financing,insurance,realestate
andbusinessservices
Community,socialandpersonal
services
2.4
7.1
12.7
5.6
7.7
5.4
8.2
10.0
2.8
6.7
9.9
6.9
6.0
6.4
9.7
7.5
1.7
5.5
7.8
8.2
3.9%
1.8%
7.2%
7.9%
1.2%
3.2%
2.9%
2.7%
9.8%
4.3%
12.6
10.9
8.6
9.3
12.8%
9.9%
9.8
10.0
10.8
9.0
9.1%
10.5%
8.2
7.9
5.1
7.0
5.6%
6.6%
Sources:CSO,IMaCSAnalysis
2. C o n t r i b u t i o n o f G e m s a n d J e w e l l e r y S e c t o r t o I n d i a n E c o n o m y Gems and jewellery is the leading sector, contributing to foreign exchange earnings. In FY2011, the total
exports from this sector were estimated at US$ 43,139.24 million accounting for 16.67% of the country’s
total exports.
Table2:ExportofprincipalcommoditiesfromIndia
Commodity
Engineeringgoods
Gemsandjewellery
Petroleumproducts
Chemicalsandrelatedproducts
Textiles
Agricultureandalliedproducts
Unclassifiedexports
Oresandminerals
Electronicgoods
Leatherandmanufacturers
Cottonrawincludingwaste
Marineproducts
Plantation
Carpets
Handicrafts
Sportsgoods
Projectgoods
Total
AprMar
2010
32,554.30
29,081.11
28,191.97
24,410.36
19,142.83
12,617.05
8,634.14
8,722.04
5,624.41
3,368.05
2,050.76
2,095.28
1,053.03
736.57
225.48
141.00
103.05
178,751.43
AprMar
2011
59,930.03
43,139.24
41,403.50
30,997.19
22,423.93
17,953.03
10,316.12
10,204.37
8,969.13
3,765.35
2,870.20
2,536.92
1,351.82
981.63
331.54
159.26
65.27
257,398.53
%Growth
%Share
84.09%
26.81%
46.86%
26.98%
17.14%
42.29%
19.48%
17%
59.47%
11.80%
39.96%
21.08%
28.37%
33.27%
47.04%
12.95%
36.66%
44.00%
23.28%
16.76%
16.09%
12.04%
8.71%
6.97%
4.01%
3.96%
3.48%
1.46%
1.12%
0.99%
0.53%
0.38%
0.13%
0.06%
0.03%
100.00%
Sources:DirectorateGeneralofForeignTrade(DGFT),IMaCSAnalysis
3.
OverviewofGlobalGemsandJewelleryIndustry
Gems and jewellery sector is categorised under three subsectors namely gemstones, jewellery and
pearls.
75
Figure2:SSubsectorsinGemsandjewelleryindustry
Gem
mstones
Jewellery
Diamonds,coloured
precious,sem
mi
stones—p
preciou
us,synthetic
Plain
gold,studded,silveer,
costume
Pearls
Source:IM
MaCSResearch
In FY2011
1, the global demand was about 2,060 billion tonness, with 17% growth
g
over FY2010.
F
The Asian
gold jewe
ellery industry
y was valued
d at around US$
U
150 billio
on in FY2011
1, growing att about 9%. 1 The
global gold industry wa
as dominated by India and China, which
h together con
nstituted 51%
% of global demand
for gold je
ewellery, gold bar and gold
d coin. Also, in FY2011, the gold jewelle
ery demand decreased
d
in terms
of volume
e in the US and
a UK by 14
4% each and
d Italy by 16%
%. However it increased in value terms: US
demand increased by 8%, UK by 10%
1
and Italyy by 12%. In countries su
uch as South Korea, Indon
nesia,
Japan an
nd Thailand the
t
demand has shifted from 22/24-ccarat gold je
ewellery to 18
8-carat gold, gem
studded je
ewellery and branded silve
er jewellery.
Table3:Trendsingglobalgoldjewelleryde
emand
FY2010
ntries
Intermsofvolume
Coun
Unite
edStatesofAm
merica
Deecreasedby14
4%
Unite
edKingdom
Deecreasedby14
4%
Italy
Deecreasedby1
16%
Source:Wo
orldGoldCoun
ncil(WGC),IMa
aCSResearch
4.
Intermsofvalue
e
Inccreasedby8%
Inccreasedby10%
%
Inccreasedby12%
%
O verview ofIndia nGemsaandJewe
elleryInd
dustry
The gemss and jewellerry industry ha
as a very imp
portant role in the Indian ecconomy. It is among the fa
astest
growing. In FY2011, the
t
industry was estimate
ed at approxximately ` 48
80,000 crore (US$ 100 biillion),
estic consump
ption.2
comprising exports as well as dome
Figure3
3:Gemsand
djewelleryindustrystru
ucture
FY2011
Exports
43%
Domestic
consum
mption
57
7%
1
World Golld Council
2
Gemsand
dJewelleryExp
portPromotion
nCouncil
76
Source:GJEEPC,IMaCSReesearch
The indusstry is charac
cterised by a highly unorga
anised sectorr with high wo
orking capital and export driven
d
operationss. It also emp
ploys over 1.8
8 million peop
ple directly orr indirectly. Th
here are overr 100,000 jew
wellery
manufactu
uring units an
nd about 6,000 diamond prrocessing units. The industry has also been
b
declared
d as a
thrust secctor by the Go
overnment of India.
The Indian Gems and Jewellery ind
dustry can be segmented in
nto diamond, gold and cosstume jewelle
ery. Of
these, go
old and diam
mond jewellerry are the tw
wo major seg
gments. India exports 95
5% of the world’s
w
diamondss accounting for
f 70% of the
e world’s diam
mond trade.3
Figgure4:Keyssegmentsoffgemsandjjewelleryse
ectorinIndiaa
DiamondJJewellery
Go
oldJewellery
CostumeJeewellery
••Indiaisthe3
3rdlargest
consumeraftterUSand
Japan
diamonds
•
•11outof12
intheworldare
processedinIndia
•
•Indiaisthef
irstcountry
tomineandpolish
diamonds
•Indiaisthelargest
marketforgold
dominantporrtion
•Apred
ofgold
djewellery
manuffacturedinIndiais
usedfo
ordomestic
consum
mption
• Indian
ngoldmarkett
wasesstimatedat74
46
tonnessin2010
•Indiancostum
me
j
jewellerycon
ntributes
0
0.3%oftheg
lobalsales
•Witnessinggrowthin
t
theglobalare
ena
•NascentmarketinIndia
Source:Ind
diaBrandEquittyFoundation(IBEF),WorldG
GoldCouncil(W
WGC),IMaCSR
Research
In FY2011, the total exports
e
from this sector were estimatted at US$ 43,139.24
4
miillion growing
g at a
compound
d annual gro
owth rate (CA
AGR) of 21.3% from 200
02 to 2011. Primarily, ge
ems and jew
wellery
exports ta
akes place th
hrough units based
b
in special economic zones (SEZ
Z) and exporrt promotion zones
z
(EPZ)
Figgure5:Gem
msandjewellleryexportss
50000
43,139
45000
40000
CAGR:21..3%
US$,million
$,
35000
434
29,4
30000
24,894
25000
20,921
17
7,159
15,658 16,701
20000
1
12,112
15000
10000
7,569
9,162
5000
0
102 200203 200304
2
20040
05 200506 200
0607 200708
8 200809 2009
910 201011
2001
3
IndiaBra
andEquityFoundation(IBEF)
77
Source:GJEEPC,IMaCSRessearch
Products exported fro
om India secctor include cut and polished diamo
onds, gold je
ewellery, coloured
gemstone
es, pearls, synthetic stone
es, coins and non-gold jew
wellery. Each of these pro
oduct exports grew
substantia
ally in FY2011
1 with the tota
al year-on-yea
ar growth in exports
e
at 46.9%.
Table4:Productwissegemsand
djewellerye
exports
Items
FY2010
US$,million
FY2011
n
US$,million
Grrowthpercenttage
Cutandpolished
18,243.92
28,251.92
55.68%
diamonds
Roughd
diamonds
744.44
1,083.00
45.48%
Goldjew
wellery
6,940.47
8,397.60
21.16%
Goldme
edallionsand
2,738.20
4,487.99
63.90%
coins
Coloure
edgemstones
286.78
314.54
9.68%
Pearls
3.40
4.15
22.06%
Nongolldjewellery
416.021
563.82
35.52%
Synthetticstones
1.35
14.07
Roughsstonesandpeaarls
10.23
22.15
116.52%
Total
43,139.24
29,348.81
46.89%
Source:GJEEPC,IMaCSReesearch
A predom
minant portion diamonds prrocessed in India is exporrted in the forrm of either polished
p
or fin
nished
diamond jewellery.
j
In FY2011,
F
diam
monds accounted for majo
or portion of exports,
e
contrributing 65.5%
% and
followed by
b gold jewellery (29.8%), rough diamon
nds (2.51%) and
a coloured gemstones (0
0.72%).
Figure6
6:Shareine
exports
FY2011
Rough
D
Diamonds,
2.51%
Coloured
Gemstones,
0.72%
Others,
1.40%
Goldjewe
ellery,
29.86%
%
Cutand
polished
diamonds,
65.49%
Source:Geemsandjewelleeryexportprom
motioncouncill(GJEPC),IMaC
CSResearch
Destinatio
on wise Unite
ed Arab Emirrates (UAE) is
i the major importer of gems
g
and jew
wellery from India,
contributin
ng 47% to the
e total exportss. Hong Kong
g (22%) and United
U
States of America (11%) are the other
leading im
mporters from
m India. Othe
er export desstinations incclude Belgium
m, Israel, Sin
ngapore, Tha
ailand,
Japan, Un
nited Kingdom
m (UK) and Australia.
78
Figure7:D
Destinationw
wisegemsaandjewelleryexports
FY2011
Japan,1%
UK,1%Ausstralia,1% Others,5%
Thailand,1%
%
Singaapore,1%
Isreal,3%
Belguim
m,5%
UAE,47%
%
USA,11%
HongKong,22%
Source:GJJEPC,IMaCSReesearch
India has limited natura
al resource in
n terms of raw
w materials. A large portion
n of rough dia
amonds, gold bars,
recycled gold
g
bars, raw
w pearls, rou
ugh coloured stones and silver
s
bars is imported. In FY2011, the
e total
imports in
n this sector were
w
valued at
a US$ 41,13
30.29 million with
w a year-on-year growth
h rate of 47%
% over
FY2010.
Fig
gure 8: Gem
ms and jewellery importts
2010
11
41,930
2009
10
2
28,844
2008
09
23,003
2007
08
CAGR:32.56%
18,000
0
10,00
00
20,00
00
30,000
US$,million
000
40,0
50,0
000
Source:GJEEPC,IMaCSReesearch
Major porrtion of imporrts are of cutt and polishe
ed diamonds, contributing to almost ha
alf of total imports.
Rough dia
amonds and gold
g
bars are the other significant imporrts.
79
Table5:Productwissegemsand
djewelleryimports
Items
Cutandpolisheddiam
mond
Roughd
diamonds
Roughccolouredgemsstones
Rawpeaarls
Roughssyntheticstone
es
Goldbaar
Silverbaar
Platinum
m
Others
Total
Source:GJEEPC,IMaCSReesearch
5.
FY2010
(US$million
n)
11,609.63
9,047.67
117.16
4.86
2.28
7,474.43
31.99
4.31
552.11
28,844.44
FY2011
(US$million)
20,774.38
11,929.91
145.76
6.94
9.00
8,275.63
38.66
29.78
720.11
41,930.29
Growtth
(yoyy)
78.94%
%
31.86%
%
24.41%
%
42.80%
%
294.74
4%
10.72%
%
20.85%
%
590.95
5%
30.43%
%
45.37%
%
Shaare
(2010
011)
49.5
55%
28.4
45%
0.35%
0.02%
0.02%
19.7
74%
0.09%
0.07%
1.72%
100.00%
Em
merging TrendsaandKeyd
developm
mentsin thesecttor
India’s ge
ems and jewe
ellery industrry is being sttrongly suppo
orted by increasing dispo
osable income
e and
rising asp
pirations. Bran
nded jewelleryy and international brands are also gain
ning importan
nce. According to a
research by WGC, 75%
% of women in India are co
onstantly searrching for new
w designs.
Figure9:K
Keytrendsin
nthegemsaandjewellerrysector
Growthin
G
organised
retail
Ke
eytrends
Alliances
between
domesticand
internationaal
players
Increaasein
advertising
byrettailers
Source:Companyannuallreports,IMaC
CSResearch
The indusstry is highly
y unorganised
d with organised retail acccounting forr just 5% of total markett. The
unorganissed retail se
egment comp
prises, mainly, family jew
wellers. Therre are appro
oximately 450,000
goldsmiths in India. With
W a numberr of organised
d jewellery rettailers enterin
ng India, this segment
s
is ga
aining
importancce. Exposure to Internet, changing
c
lifesstyles and intternational tra
avels has increased aware
eness
of branded jewellery.
80
Figure10:Factorrsinfluencin
nggrowthoffbrandedjewellerymarrket
In
nnovative
an
ndlatest
deesigns
Valueaddeed
servicessu
uch
aslifetime
return
guarantee
Guaaranteeof
puriity
Source:CoompanyAnnuaalReports,IMaaCSResearch
Many Ind
dian brands are
a also focu
using on advvertising to crreate custom
mer awarenesss. They advvertise
though te
elevision and newspaper advertiseme
ents and hoa
ardings. A few
w major playyers also co
onduct
fashion sh
hows and pa
articipate in trrade fairs and exhibitions. These prom
motional show
ws and exhib
bitions
have eme
erged as a very comprehen
nsive tool for showcasing the
t collectionss.
In order to
t increase the
t
reach Ind
dian players are entering
g into strateg
gic alliances with a numb
ber of
internation
nal brands. Such
S
alliancess help the com
mpanies diverrsify their product portfolio
os and also exxpand
the custom
mer base.
T
Table6:Ma
ajordealsinthesector
Indianccompany
Foreignco
ompany
GitanjalliGemsLimited
SamuelJeewellersInc.
Shrenuj&Co.Limited
d
SimonGo
olub&SonsIncc.
GitanjalliGemsLimited
Rogers
GitanjalliGemsLimited
GianttiItaaliaSRL
Source:Neewsreports,Co
ompanywebsittes,IMaCSReseearch
6.
TTypeofdeals
G
Gitanjalibough
ht97%stake
A
Acquiredmajor
ritystake
A
Acquired
A
Acquired
H istorical growth andprojjections The gemss and jewellerry sector is de
emand driven
n and has hig
gh seasonalityy. India’s culture and myth
hology
embrace gold and diam
mond jewelle
ery. Indians pu
urchase gold during annual festivals su
uch as ‘Dhan
nteras’
and ‘Aksh
hay Tritiya’. Th
his has traditionally created a strong se
easonal increa
ase in sales.
arket has grow
wn at a CAG
GR of 20.86%
% in the period
d FY2004-FY
Y2011. The growth
g
The gold jewellery ma
was main
nly because of
o high increa
ase in gold prrices (CAGR of 23.4% fro
om FY2005-FY2011) backed by
support frrom the Government. In the
e three years to 2014-15, the
t gold jewe
ellery market is
i likely to con
ntinue
to be influ
uenced by the
ese factors. By
B 2014-15, the
t domestic market is exxpected to gro
ow to Rs. 25
53,067
crore.
81
Figure11:Domesticdemandforgoldjewellery
300,000
253,067
250,000
Rs.,Crore
200,000
175,741
150,000
122,042
100,981
100,000
70,282
73,944
54,658
50,000
0
200607 200708 200809 200910 201011 201213 201415
(P)
(P)
Source:IMaCSResearch
The diamond jewellery market retail sales in India have grown at a CAGR of 19% in the period FY2004FY2011. Exports were valued at Rs. 12,798 crore in FY2011. The growth in diamond jewellery market
was, mainly, because of a combination of factors such as increase in prices of diamond and gold and
increase in demand for diamond jewellery. In the three years to FY2014-15, the diamond jewellery market
is likely to continue to be affected by these factors. By 2014-15, the retail sales are expected to grow to
Rs. 37,099 crore and export to ` 19,038 crore.
Figure12:Retailsalesfordiamondjewellery
40,000
37,099
35,000
Rs,crore
30,000
26,198
25,000
18,500
20,000
15,000
10,000
6,500
8,000
9,800
11,300
12,800
14,300
5,000
0
2005
2006
2007
2008
2009
2010
2011
2013 2015
(P)
(P)
Source:IMaCSResearch
82
7.
KeygrowthDrivers
The main drivers of the industry are highly skilled and low cost manpower along with strong Government
support. Globally, Indian jewellery is known of exquisite craftsmanship. The industry is also
technologically advanced along with a strong global supply chain. Growing household income and
changing consumer perceptions and preferences, increasing use of high-end technology, growing
number of gemological training institutes are also few factors affecting the growth.
Figure13:KeygrowthdriversofGemsandJewelleryindustryinIndia
Highly
skilled
manpowe
r
Increasing
useof
highend
technolog
y
Growth
drivers
Growing
household
income
Lowcost
of
productio
n
Strong
governme
ntsupport
Source:IBEF,IMaCSResearch
In India, the average per-carat labour cost for cutting and polishing diamonds is much lower as compared
to rest of the world. There is a continuous traditional demand of jewellery in India, as jewellery is a very
important part in Indian culture. Any wedding in India is incomplete without jewellery and jewellery is the
preferred choice of gift by the near relatives to the bride and groom. Jewellery is also considered as a
very important saving and investment vehicle by Indians. The Government of India also provides strong
support to this sector by providing waiver in custom duties and establishing SEZ for the sector.
8.
Keychallengesandconstraints
The industry also faces a number of challenges which include rise in gold prices, dependence on imports
for raw materials, emerging threats from other countries like China. Large presence of unorganized sector
is also a constraint faced by the sector.
Figure14:Keychallengesfacedbythesector
Dependence
onraw
material
imports
Emerging
threatfrom
othercountries
Risegoldprices
Key
challenges
faced
83
Source:IMaCSResearch
High fluctuation in gold prices creates a negative impact in the mind of a consumer leading to decline in
sales. In the past five years, the gold prices have more than doubled affecting the consumers spending
pattern. Few people also try to delay their purchases due to high gold prices.
Figure15:Increaseingoldprices
30,000
23,855
25,000
Averagegoldprices(Rsper10gram)
Rs.
20,000
18,264
15,094
15,000
10,000
12,220
9,011
9,283
2006
2007
6,613
5,000
0
2005
2008
2009
2010
2011
Source:MultiCommodityExchange(MCX),IMaCSResearch
Although India currently enjoys dominance in the world’s cut and polished diamonds market, a few
countries like China and Africa posses threat to the country in long term. An increasing number of
diamond processors from Israel and Belgium, and even India, are setting up facilities in China. African
countries, which include Namibia, Botswana, Angola, and South Africa have sought to establish cutting
and polishing centres. These countries which have high availability of raw materials are considering on
imposing export duties on rough diamonds, which would raise costs for Indian processors.
9.
Governmentinitiatives
The Government of India has taken many initiatives to boost the gems and jewellery industry as it is the
major foreign exchange earner for the country. These initiatives include establishing bodies to promote
trade, setting up special economic zones to increase investment in this sector, allowing 100% foreign
direct investment (FDI) through automatic route, allowing duty free imports of raw materials, which include
rough semi-precious stones, rough coloured precious gem stones rejected jewellery and polished
diamonds. The Government has also lowered the duty for importing platinum.
84
Figure16:G
Governmentinitiatives
Settingup
SEZs
Esttablishing
Govvernment
b
bodies
Taxbenefits
Government
Initiatives
Loweringorr
removing
import
dutiesonraw
w
materialsand
alsofinished
d
products
A
Allowing100%
%
FDI
Source:IBEEF,GJEPC,IMa
aCSResearch
Governme
ent of India has establish
hed a numbe
er of governm
ment bodies in order to facilitate
f
trade
e and
promote exports
e
which
h include GJE
EPC and the Gems
G
and Jew
wellery Trade
e Council of In
ndia (GJTCI).
Table7:Majorgovernmentbodie
esandtheirffunctions
Go
overnmentBody
Gemsand
Jew
welleryExportt
Pro
omotionCoun
ncil
(GJJEPC)
Ye
earof
estab
blishment
1
1966
Numberoff
members
About6,500
0
85
Functions/respo
onsibilities
x TradeFacilitator:U
Undertakes
directtradepromo
otional
activittieswhichincludeorganisin
ng
participationininteernational
showss,sendingand
dhostingtradee
delegaations,andim
magebuilding
exercisesthrough
adverttisements.
x AdvissoryRole:Helpsinbetter
interactionandund
derstanding
betweeentradersan
nd
Goverrnment.
x NodallAgencyforK
Kimberley
ProcesssCertificatio
onScheme:
Implem
mentandoveerseethe
KimbeerleyProcessC
Certification
Schem
me
x Provid
destrainingan
ndresearch
TheGemand
JewelleryTrade
CouncilofIndia
(GJTCI)
About
500
2000
x Publishesanumberofbrochures,
statisticalbooklets,trade
directoriesandmagazine
x Unitethejewellerytradeto
showcaseitspotentialnationally
aswellasinternationally.
x InvolvedinintroducingtheIndian
gem&jewelleryproductstothe
domesticandinternational
markets
Source:GJEPC,GJITC,IMaCSResearch
The Government has also allowed 100% FDI, in this sector through automatic route. For exploration and
mining of diamonds and precious stones FDI is allowed up to 74% and for exploration and mining of gold
and silver and minerals other than diamonds and precious stones under the automatic route. The
Government annual initiatives are announced in the annual budget and foreign trade policies.
Table 8 : Initiatives under FTP
S.
No.
PoliciesrelatedtogemsandjewelleryunderFTP(200914)
Importofgoldof8caratand aboveallowedunderreplenishmentschemesubjectto
importbeingaccompaniedbyanAssayCertificatespecifyingpurity,weightandalloy
content.
Importofdiamondsonconsignmentbasisforcertification/gradingandreexportbythe
2
authorisedagenciesofGemologicalInstituteofAmerica(GIA)inIndiaorotherapproved
agencieswillbepermitted.
Exemptedroughcolouredpreciousgemstonesfromcustomsdutyandrough,semi
3
preciousstonesarefromimportduty.Alsoabolishedimportdutyonpolisheddiamonds.
Topromoteexportofgemsandjewelleryproducts,thevaluelimitsofpersonalcarriageof
4
gemsandjewelleryproductsforcompaniesparticipatinginoverseasexhibitionsincreased
toUS$5million.
Topromotetheexportofgemsandjewelleryproducts,thevaluelimitsofpersonal
5
carriagehavebeenincreasedfromUS$2milliontoUS$5millionincaseofparticipationin
overseasexhibitions.
Dutyfreeimportentitlementforrejectedjewelleryupto2%offreeonboard(FOB)value
6
ofexports
Raisedthelimitvalueofjewelleryparcelsforexportthroughforeignpostoffice(viaspeed
7
post)fromUS$50,000toUS$75,000
Extendedthetimeperiodforreimportofbrandedjewellery,remainingunsoldfrom180
8
daysto365days
InanendeavourtomakeIndiaadiamondinternationaltradinghub,itisplannedto
9
establish“DiamondBourses”
Source:DGFT,IBEF,IMaCSResearch
1
10. CompetitionAnalysis
The Indian gems and jewellery market extremely fragmented and is largely dominated by the unorganized
players. But, organised players are gaining significance with branded and designer jewellery showing
tremendous growth potential. These players are focus on utilizing the high skilled labour and make
considerable improvements in their collections and services.
86
BUSINESS OVERVIEW
The following information is qualified in its entirety by, and should be read together with, the more detailed
financial and other information included in the Draft Red Herring Prospectus, including the information
contained in the section titled “Risk Factors” on page 14 of the Draft Red Herring Prospectus. In this
chapter, unless the context requires otherwise, any reference to the terms “We”, “Us” and “Our” refers to
Our Company. Unless stated otherwise, the financial data in this section is as per our consolidated
financial statements prepared in accordance with Indian Accounting Policies set forth in the Draft Red
Herring Prospectus.
Overview
Currently our company has three manufacturing units
Sr.
1
2
3
Location Of Manufacturing Unit
Plot No 16(P), 17, 28 & 29(P) SEEPZ-SEZ, Andheri (E),
Mumbai Unit No I
Plot No 16(P), 17, 28 & 29(P) SEEPZ-SEZ, Andheri (E),
Mumbai Unit No II
Unit No 427,Plot No 250, Surat Special Economic Zone,Sachin,
Surat
Installed capacity
5,00,000 Pcs
65,000 pcs of jewellery and
50,000 carats.
The most important factor for the success of business and higher profit margin is selling tested products
directly to retailers and absence of middleman for sales activity. On account of direct selling to retailers
the company came to know about the change in the fashion trend of jewelry and accordingly produce the
new concept items. The company use CNC machines for making models as well as high end Jewellery.
Our Competitive Strength
x
Direct marketing to the chain stores
The company is selling the products through Selection Inc in USA. The direct marketing of the
product to the chain stores like Zales, Kim etc resulting into higher margin compared to other
players in the industry. The Marketing strategy of the company from manufacturer to retailer
helps the company to know market trend of the product, preference of customers and
immediate feedback for new concepts in the jewellery.
x
Use of Modern technology and Quality standards
The main promoter Shrikant Parikh being an engineer has applied engineering knowledge for
manufacturing Jewelry. The company is using CNC machine technology for manufacturing
Jewellery against conventional method. The Company is using metal moulds, precise tools
and modern CNC machines for making models as well as jewellery.
x
Value added service tagging, padding & Bagging
The company is supplying goods to large stores and the company is providing value added service
which includes tagging, padding and bagging. The words indicate the packing of product in
attractive and beautiful manner for specialized dispatching. As the jewelry is by choice therefore
packing and presentation plays important role in International market.
x
Experienced management team and motivated employee
We have a highly experienced and qualified management team. Our MD is Shrikant Parikh
having 20 years of experience of diamond studded Jewellery. The other directors of our Board
comprises of persons having rich experience in the engineering filed and administrative filed that
87
gives diversified insights and also help us in identifying new business avenues. This is backed by
motivated and qualified staff that is instrumental in our business growth. The policies are drafted
by the top management and implemented by the staff.
Business Strategy
x
Expand customer base
The company is selling the diamond studded Jewellery in U.S.A through marketing hand
Selection Inc among few retail chain stores. The company intends to open some new wholesale
account in Atlanta area as well as in Brazil, Panama etc. The company will reduce exposure to
not more than 15 % to any account in order to avoid trap of single account. The company would
like to start promoting Jewellery through E Commerce with extensive advertisement campaign.
x
Expand the geographical presence
The company is marketing the Diamond Studded jewellery in U.S.A. only. Recently the company
has started the trading of diamond and gold in the Arabian Countries. The company will start
manufacturing high end jewelry which is in demand in Arabian countries/UK.
x
Manufacturing High End Jewellery
At present the company is manufacturing popular jewellery under the brand CM99 and cm 199 i.e
Jewellery pricing ranging from $ 99 to $ 199. However the company in order to enter into Arabian
countries and U.K intends to manufacture high end Jewellery. The company will use better quality
of diamond and metal used will be 14 and 18 KT. Gold, platinum, titanium as well as stainless
steel.
x
Internet marketing
As the IT and call center business is booming in India the company can take advantage of this
techniques. In India we have educated and trained work force in this area of working, which is
easily available in SEEPZ area where we have presence. The company will list fashion Jewellery
on ebay offering customers to bid or have a discounted deals. Such type of marketing under the
b2C model will help the company to reduce marketing overheads. The company will become
global player in Jewellery business.
x
Vertical Integration
Generation of precious metal scrap and recovery of the same is very important in Jewelry
Business and it does amount a lot. Effective Recovery of Precious Metal does add to profitability
to the Jewelry Industry considerably. Keeping this in mind we have decided to put up
independently operating full scale Precious Metal Refinery which will be used for captive usage
as well as to cater other Jewelry establishments located in the SEEPZ. We have developed
unique process for removing Stones from Jewelry. These diamonds (removed from Jewelry) will
be free from any chemical or heating effect like frosting, Blur look, Milky opacity etc and the
diamonds will be as clear as original quality.
Putting up Precious Metal Refining Plant will lead to buying of Diamond jewelry at effective rate
and that will land up in availability of good quality of Diamonds and Precious raw Metal in enough
quantity for our captive consumptions.
™ Weakness and Threat
x
The long credit period to the clients will block the funds of the company for longer period resulting
into lower turnover of the company
88
x
x
x
The Main promoter Shrikant Parikh is responsible for marketing, administration and production
The company has concentrated in USA Market and few customers only.
Fluctuating Precious Metal Prices calls for quick turn-around of Manufactured Jewelry Products
into final sell to avoid any ill-effect of ups and down of raw metal prices.
Our Business Operations
We manufacture diamond studded Jewellery using various metals like gold/silver/platinum/stainless steel.
Our operations include product designing, testing the same on various outlays, supplying the tested
products to retail chain stores based on orders received from customers and providing value added
service like tagging, padding & Bagging. Our product includes Ring, Pendant, Earring, Bracelet, Trio Ring
and set.
We are exporting the goods only in USA through marketing hand Selection inc. The sales of diamond
studded jewellery for the year ended on 31st March, 2011 was ` 34.00 crores . For the Half year ended
on 30th September 2011 the company had sold Jewellery worth ` 18.59 crores.
The company has started trading of Diamond, Gold and Gold findings, and Silver and silver findings
activity from Surat in the month of March, 2010. The company had obtained the permission for trading of
50,000 carats of rough, cut and polished diamonds, gemstones from the unit established at Surat Special
Economic Zone.
Collaborations, any Performance guarantee or assistance in marketing by the collaborators.
Our Company has not entered into any collaboration till date, but is in discussion and there is a possibility of
collaboration with one of the company in the field of Precious metal Refining based at USA.
We have not entered into any agreement for Performance guarantee or assistance for marketing by any
collaborators.
Manufacturing Process
The manufacturing process followed for diamond Jewellery is shown in the following schematic diagram:
(1) Designing: The designs are developed on the basis of feedback from the market and the current
trend in the jewellery market. The designs are finalized by the merchandiser, or on the basis of internal
discussion and are then forwarded to the Model Making department We use CAD technology for creating
Design.
89
(2) Model Making: Sample models of the selected designs are then made in silver. The models are made
by using CAD and CAM machines and/or by skilled model makers. This model is then sent to the mouldcutting department.
(3) Mould Cutting: In this process, rubber or metal mould is made for mass production. The mould is
first approved for commercial production by the product development department and a test trial of the
design is carried out by making a finished gold piece.
(4) Wax and Wax Setting: Wax is injected into the rubber mould / metal mould to produce wax jewellery
piece. These wax jewellery pieces are given finishing touches and precious stones are then studded on
these wax pieces. All the wax jewellery pieces are then moulded together to form a tree so as to facilitate
mass production. The wax tree so produced is then forwarded to the Casting Department.
(5) Casting: This wax tree is covered with investment powder and then put in burn out furnace in which
gold is poured to obtain the contours in gold form. Subsequently, the gold tree is removed from the iron
flasks and then forwarded for filing.
(6) Filing: In this stage, the excess metal in the grooves and channels in the jewellery pieces are
removed. Thereafter, the jewellery pieces are filled for removing the rough surface of the pieces using
different tools & hard buffs.
(7) Setting & finishing: Filed pieces are then sent to the hand setting department, where broken or
missing diamonds are replaced or in the case of semi wax-set pieces, they are handset with the different
type of settings as required. The pieces are then polished and sent to packaging and dispatch
department.
(8) Polishing, Quality Control and Rhodium: The pieces from setting department sent to polishing
where they are finished and sent for quality assurance and finally rhodium platted
Production facilities
The Jewellery production facility is located at Plot No 16(P), 17, 28 & 29(P) SEEPZ-SEZ, Andheri (East),
Mumbai-400 096, Maharashtra, India. The details of machinery at this facility are as under:
Sr.
Machinery
No of
Functionality
Machines
1
CNC
Turning
Machines
1 Used for making bands /rings from precious
(Lathe) with Milling head.
metals blanks /tubes with diamond positions duly
machines. Also used for making Models requiring
High Precision Machining on Lathe/ Milling Head.
2
CNC Multiple axis milling
1 Used for making various jewellery models and
machines
also direct manufacturing of Watch Cases to fix
the Diamonds. We can make models/ rings with
diamond setting such as Bezel setting, Channel
setting, prong setting etc. We can make most
models using all the 5 axes that are available on
the machine.
3
CNC Traub machine
1 Used for making links of Bracelets, Necklace and
numerous more jewelry accessories to facilitate
Diamond setting made from Precious metals.
Also most suitable for making earring post/screw
backs in bulk quantities.
4
CNC Hydrulic Presses
5 Used for making numerous jewelry items by the
process of coining and stamping from precious
metal in the form of sheet metal.
5
Wax Injector
5 Injecting wax into the rubber mould / metal mould
90
6
7
Wax Solder
Fordem Motor
60
55
8
Micromotor
6
9
Laser Star
6
10
11
12
Polishing Machine
Grooving Machine
Rhodium Machine
30
25
3
to produce wax pattern of Jewelry.
Soldering of Wax in the wax pattern of jewelry
Diamond setting and surface finishing of the
jewelry piece.
Diamond setting and surface finishing of the
jewelry.
Soldering metal to metal, joining Bracelet Links,
repair for pin holes,
Finishing of Jewellery
Grooving of Jewellery and diamond
Plating of Jewellery
Infrastructure Facilities
Raw Material
The principal raw material used for manufacturing jewellery is cut and polished diamond, Gold and Silver.
The diamonds are purchased from Domestic market and from local suppliers. Gold and precious mental
is purchased from MMTC, SEEPZ Branch and Bank of India, SEEPZ branch. Silver is also purchased
from local market and foreign market.
Power
We have been sanctioned power of 360 KVA from The Tata Power Company Limited which meets our
present requirement and further requirement.
Human Resource
Our Company has 54 employees for manufacturing and administrative work as on 28th February, 2012. Apart
from that we also have 206 employees as on 28th February, 2012 on contractual basis. We believe that our
employees are the key to the success of our business. We focus on hiring and retaining employees and
workers who have prior experience in the Jewellery Industry. We have a policy of providing the necessary
training to our new employees and workers. We view this process as a necessary tool to maximize the
performance of our employees. Our senior management team consists of experienced individuals with
diverse skills in manufacturing, engineering, international business and finance.
Effluent Treatment
We have received consent from Maharashtra Pollution Control Board for manufacturing of Gold and
Diamond Studded Jewellery. The consent is valid upto 31st Januaru, 2012. However the company had
applied for renewal of the consent from MPCB. The renewal consent is applied in the name of partnership
firm. The company is yet to apply for pollution control board permission for Gold refinery business.
Our Market:
The company is selling the product in U.S.A market only and out of total sales 60% is through retail chain
stores and 40% through mom and pops. Selection Inc. the marketing arm employ sales personnel who
provides the latest fashion trend in the jewellery, approach the new clients and sale of product through
mom and pos. The company is presently selling the popular brand jewellery ranging from US $99 to US$
199. In the future the company intends to manufacture high end jewellery and enter in to Arabian Market,
United Kingdom so as to reduce the dependence on U.S.A. market only. Apart from that the company
intends to reverse the proportion and 60% of total sales in U.S.A will be through mom and pops and
remaining 40% through retail chain stores. At present the total sales of Diamond Studded Jewellery is In
U.S.A only but in future the company intends to spread in other countries only and over a period of next
five years the sales in the U.S.A will be 60% and remaining from other countries.
91
Our Customers
The following table illustrates the concentration of our sales among our top customers
Customer 31.03.09
Top
Customer
Top 5
Customer
3005.46
%
of 31.03.10
total
Sales
72.58 1056.38
4140.47
100.00
2527.01
%
of
total
Sales
41.80
100.00
31.03.11
(` in crores)
%
of
total
Sales
5218.80
73.73
30.09.11
6759.93
%
of
total
Sales
42.03
16083.16
100.00
7077.90
100.00
Tie up with Supplier
The following table illustrates the concentration of raw material among our top suppliers.
Supplier
31.03.09
Top
Supplier
Top 5
Supplier
Top 10
Supplier
11.51
%
of 31.03.10
total
Sales
5.85
8.03
%
of
total
Sales
10.41
31.03.11
685.97
%
of
total
Sales
53.56
(` in crores)
%
of
total
Sales
537.76
76.12
30.09.11
21.76
11.06
22.49
29.17
1066.84
83.30
576.21
81.56
23.41
11.89
25.94
33.63
1098.76
85.80
577.73
81.77
Competitors
We operate in a highly competitive market and there are large numbers of players in organized sector as
well as in unorganized sector. The quality of the product and the design are the important factor to face the
competition. We have established our own contact, without any middle man like wholesaler, semi
wholesaler, broker etc, with the retail chain stores and on account of that the requirement of customer as
well as change in the design pattern, preference of customer can be known well in advance. Apart from
that we are providing value added service like tagging, bagging etc so as to remain ahead of competitors.
Export and Export Obligation
We have an export obligation as our diamond studded jewellery unit and diamond trading units are situated
in SEEPZ-SEZ. The company has to achieve positive net foreign as prescribed in the Special Economic
Zone Rules, 2006. If the unit has not achieved the positive net Foreign Exchange Earning, the unit shall
be liable for penal action under the provisions of the Foreign Trade (Development and Regulation) Act,
1992.
The company has given projected export turnover of US$6,66,66,670 and Net Foregn Exchange
Earnings of US$ 90,00,010 for the period from 2010-11 to 2014-15 for unit no I and projected export
turnover of US$4,00,00,000 and Net Foreign Exchange Earnings of US$ 1,88,60,000 for Unit No II.
Insurance
Our Company has insured our assets, liabilities and stocks through various insurance policies details of
which are as under.
Sr.
No.
Name of
the
Policy
Insured
with
Description
Policy No
92
Policy
Period
Premiu
m
(Amount
in `)
Sum
Insured
(Amount
in `) (in
1. Jewellers
Block
Insurance
Policy
The oriental
Insurance
co. Limited
2. Standard
Fire and
Special
Perils
Policy
National
Insurance
Company
Limited
Stock and stock in
trade of Jewellery,
Gold, or Silver
ornaments , plate
pearls and
precious stones,
cash and currency
notes
Factory Building,
plant and
machinery, Spare
parts and Tools
and Electric
Installation
121802/48/
2012/246
261701/11/
10/330000
1076
04.06.201
1 to
03.12.201
2
11.01.201
2
To
10/01/201
3
1,45,367
Crore)
25.00
1,47,764
18.71
Indebtedness
Our Company is availing following Working Capital facilities from the following bank, details of which are
as under:Type of
Loan
Sanction
Amount
(` in
crores)
Bank of India
(1)
5.30
Export
Packing
Credit
( Sub Limit
Gold Loan
3.32 crores)
( ETR 180
days)
(2)
5.30
FBP/FBD/FB
N/PSFC
ODFO
BC/DA
(180days)
( sub Limit
Bills on
Associates
2.65 crores)
Maximum 6.84
Limit of
1 and 2
Union Bank of India
(1)
5.16
FDBP/FUDB
P/FBP/AFDB
C
(Export Bills
of
Purpose
Amount
O/s as on
28.02.2012
(` in
crores)
Interest
Rate
Security (Combined
Security)
Working
Capital
Purpose
4.06
10.25%
1. Hypothecation of Stock
and Receivables.
Period
One year
subject to
renewal
2. Equitable mortgage of
factory premises at
Plot No 16(P),17,28 &
29(P), seepz.
3. Hypothecation of Plant
and Machinery,
furniture & fixtures,
office Equipments etc.
(security to be shared
on pari passu basis
with consortium bank
Union Bank of India
Working
Capital
Purpose
Working
Capital
Purpose
2.36
10.25%
93
1. Hypothecation of
Stock of Raw
Material s, Work in
progress, Finished
goods constituting
Gold, Platinum,
One year
subject to
renewal
One year
subject to
renewal
180daysDA)
( sub Limit
Direct Bills
4.13
Packing
Credit 2.55
Gold Loan
1.15)
Diamonds, Silver,
Gemstones, and
Jewellery of These
Items and Export
Receivables
2. Equitable mortgage
of factory premises
at Plot No
16(P),17,28 &
29(P), seepz
3. Hypothecation of
Plant and
Machinery, furniture
& fixtures, office
Equipments etc.
(security to be
shared on pari
passu basis with
consortium bank
4. Personal Guarantee
of Shrikant Parikh,
Jesingbhai Parikh
and Arpita Shrikant
Parikh
5. Corporate
guarantee of Minal
Industries Limited
and C. Mahendra
Jewels Private
Limited
Additional Terms and Conditions
1. Stamped undertaking to be furnished by the company for not withdrawing unsecured loan of
` 23.85 crores till Deb/Equity improves.
2. Reconstituted Company to execute security documents and create securities property within
2 months failing which penal interest to be charged @ 1% p.a.
3. The Company / firm to execute necessary security documents / renewal documents for
sanctioned / enhanced limit(s) duly supported by Board resolution and create and register
stipulated charges with the authorities specified for the purpose within stipulated time limit
before release of sanctioned / enhanced limits.
4. Guarantor (s) All fund based and non fund based facilities to be guaranteed by i) Shri
Shrikant J Parikh (joint & Several), ii) C Mahendra Jewels Pvt. Ltd. and iii) Minal Industries
Ltd. The Company Shall not pay any guarantee commission to the guarantors.
5. Packing Credit will be allowed only against/ L.C.s opened by acceptable banks and confirmed
export orders from approved parties and will be extended for periods not beyond the last
shipment date. Company / Firm to submit details of orders received on monthly for EPC
disbursement.
6. Bank will obtain status report on drawees before purchase/discount of the bills and such
reports will be updated annually; availability of a satisfactory status report shall be a prerequisite for such purchase / discount of bills.
7. The Company/firm to submit copy of statutory permission/clearances like ‘NOC’ from
Pollution control Board and ensure for timely renewal of same from time to time.
8. Pre shipment and post shipment limits to be secured by ECIB-WT-PC & ECIB-WT-PS
Schemes of ECGC, with the option to the Bank for obtaining comprehensive ECGC coverage
depending upon the risk prevailing in the country where export is being made. Premium
94
payable to ECGC by the Bank in respect of ECIB-WT-PC policy is to be borne by
firm/Company.
9. Any default in complying with terms of sanction within the stipulated time will attract penal
interest of 1% p.a. from the date of expiry of such time.
10. The Company’s/firm’s entire banking business (including merchant banking Dividend and
interest payments) should be routed through us/members of the consortium proportionate to
the sharing of the working capital facilities.
11. Restrictive Covenants.
*
effect any adverse changes in company’s/firm’s capital structure.
*
formulate any scheme of amalgamation or merger or reconstruction.
*
implement any scheme of expansion or diversification or capital expenditure except
normal replacements indicated in fund flow statement submitted to and approved by the
Bank
*
enter into any borrowing or non-borrowing arrangements either secured or unsecured
with any other bank, financial institution, company, firm or otherwise or accept deposits in
excess of the limits laid down by Reserve Bank of India.
*
invest by way of share capital in or lent or advance funds to or place deposits with any
other company/firm concern (including group companies / associates)/persons. Normal
trade credit or security deposit in the normal course of business or advance to employees
can, however be extended.
*
undertake guarantee obligations on behalf of any other company / firm /person.
*
declare dividend for any year except out of profits relating to that year after meeting all
the financial commitments to the bank and making all due and necessary provisions.
*
make any drastic change(s) in its management set-up.
*
approach capital market for mobilizing additional resources either in the form of Debts or
equity.
*
sell or dispose off or create security or encumbrances on the assets charged to the bank
in favour of any other bank, financial institution, company, firm, individual.
*
re-pay monies brought in by the promoters, partners, directors, share holders, their
relatives and friends in the business of the company/firm by way of deposits/loans/share
application money etc.
95
Details of Immovable Property
The following table sets forth the location and other details of leasehold properties of our company.
Sr.No
Details of
Deed/Assignment
1
Sub Lease deed
dated 01St
February ,2011
executed between
M/s Diamond &
Gem Development
Corporation
Limited and M/s
C. Mahendra
Infojewels Limited
Unit No III ( the
Sub Lessee)
Deed of
assignment dated
22nd May, 2003
executed between
C. Mahendra
Exports
And M/s C.
Mahendra
Infojewels
2
3
Leave and License
Agreement
entered
into between C.
Mahendra
InfoJewels Ltd.
and Minal Plastic
Products
(Partnership Firm)
Nature of
Right
Granted
Lease
Particulars of
the property
Consideration
Tenure/term
Usage
Unit no 427
on
Plot No 250,
Survey No
333/P
&334/P, Vill.
Sachin,
15,00,000
Lease rent `
1,000 per
annum
Administrative
and service
charges as
may be fixed
by the
management
from time to
time.
4,77,33,000
Lease rent of
` 3,07,510 to
SEEPZ SEZ
authority
15 years
from
01.02.2011
with a
provision to
renew for
the block of
15 years or
part thereof.
Setting up
manufacturing
and trading
unit
Note
Setting up
manufacturing
unit
` 1000 p.m
3 years
from
1.10.2011
Registered
Office
Area of the
Unit (1000
Sq.Ft)
Sub
lease
Lease
Super
structure
admeasuring
4392.30
Sq.Mts on
plot no
16(P), 17,28
and 29(P) in
SEEPZ SEZ,
Andheri (E) ,
Mumbai.
214- A,
Paradise
Complex,
Sayaji Gunj,
Vadodara,
Gujarat –
Note: Transfer of super structure on plot no 16(P), 17, 28 & 29(P)
The company ( erstwhile partnership firm ) had entered into deed of assignment with C. Mahendra
Exports for assignment for super structure admeasuring 4393.30 Sq.mts on plot no plot no 16(P), 17,28 &
29(P) on 22nd May 20o3 on the plot which was sub leased by SEEPZ SEZ Authority. The original sub
lease was made in favor of SU-RAJ Diamonds (India) Limited ( Suraj) by SEEPZ SEZ Authority and at
the time of Agreement to Assign executed by Suraj on 30th November,1999 in favor of C. Mahendra
Exports , the permission of Development commissioner for assignment for super structure and sub
lease of land is required. However as on date the sub lease of land and sub leases of super structure is
yet to be approved by the development commissioner. The tenure and terms of lease are not known.
Property to be purchased out of the proceeds of the Issue
For details please refer to the Section titled “Objects of the Issue” beginning on Page 53 of this Draft Red
Herring Prospectus.
96
KEY INDUSTRY REGULATIONS AND POLICIES
General
C. Mahendra Group carries on business of diamond Jewellery, gold, silver, precious stone, studded
jewellery. There are no specific laws in India governing the gems and jewellery industry in India.
The following description set forth below is a summary of the relevant regulations & policies, as
prescribed by the GoI or State Governments which are applicable to our Company and have been
obtained from publications in the public domain. These regulations may not be exhaustive and are only
intended to provide general information to the investors and are neither designed nor intended to be a
substitute for professional legal advice. Taxation statutes such as the Income Tax Act, 1961, Central
Sales Tax Act, 1956, the Finance Act, 1994, labour regulations such as the Employees‘State Insurance
Act, 1948 and the Employees‘Provident Fund and Miscellaneous Act, 1952, and other miscellaneous
regulations and statutes such as the Trade Marks Act, 1999 apply to us as they do to any other Indian
company and therefore have not been detailed below. The statements below are based on the current
provisions of Indian law, and the judicial and administrative interpretations thereof, which are subject to
change or modification by subsequent legislative, regulatory, administrative or judicial decisions. For
details of government approvals obtained by us, kindly refer to the section titled “Government and other
Statutory Disclosures on page 185 of this DRHP.
Foreign Investment
Under the applicable industrial policy and extant foreign direct investment policy, foreign direct investment
up to 100% is permitted in the gems and jewellery industry.
Investment by Foreign Institutional Investors
Foreign institutional investors (“FIIs”) including institutions such as pension funds, investment trusts, asset
management companies, nominee companies and incorporated, institutional portfolio managers can
invest in all the securities traded on the primary and secondary markets in India. FIIs are required to
obtain an initial registration from SEBI and a general permission from RBI to engage in transactions
regulated under Foreign Exchange Management Act, 2000. FIIs must also comply with the provisions of
the SEBI (Foreign Institutional Investors) Regulations, 1995, as amended from time to time. The initial
registration and RBI’s general permission together enable a registered FII to buy (subject to the
ownership restrictions discussed below) and sell freely securities issued by Indian companies, to realize
capital gains or investments made through the initial amount invested in India, to subscribe or renounce
rights issues for shares, to appoint a domestic custodian for custody of investments held and to repatriate
the capital, capital gains, dividends, income received by way of interest and any compensation received
towards sale or renunciation of rights issues of shares.
Ownership restrictions of FIIs
Under the portfolio investment scheme, the overall issue of equity shares to FIIs on a repatriation basis
should not exceed 24% of post-issue paid up capital of the company. However, the limit of 24% can be
raised up to the permitted sectoral cap for that company after approval of the board of directors and
approval of the shareholders of the company by way of a special resolution. The holding of equity shares
of a single FII should not exceed 10% of the post issue paid up capital of the company. In respect of an
FII investing in equity shares of a company on behalf of its sub-accounts, the investment on behalf of
each sub-account shall not exceed 10% of the total issued capital of that company.
Foreign Trade Policy 2009-2014
The revised foreign trade policy in India for the period 2009-2014 is a comprehensive foreign trade policy.
97
The initiatives identified with the foreign trade policy have a special focus on sectors such as the gems
and jewellery, agriculture, handicrafts, handlooms, leather and footwear. Some salient features of the
foreign trade policy in respect of the gems and jewellery sector are as follows:
• duty free import entitlement (based on free on board value of exports during previous financial year) of
consumables, tools, machinery and equipments for:
1. Jewellery made out of:
a. precious metals (other than gold and platinum)
b. gold and platinum
c. rhodium finished silver
- 2%
- 1%
- 3%
2. Cut and polished diamonds
- 1%
• duty free import entitlement of commercial samples shall be Rs. 300,000;
• duty free re-import entitlement for rejected jewellery shall be 2% of the free on board value of exports;
• import of gold of 8 karat and above shall be allowed under the replenishment scheme subject to import
being accompanied by an Assay Certificate specifying purity, weight and alloy content;
• to neutralize duty incidence on gold jewellery exports, duty drawback has been allowed on such exports;
• diamond bourse(s) would be established under the new policy to promote India as an international
diamond trading hub;
• import of cut and polished diamonds on consignment basis for the purpose of grading/certification & reexport by the authorized offices/agencies of Gemological Institute of America in India or other approved
agencies will be permitted;
• to promote export of gems and jewellery products, personal carriage limits for participation in overseas
exhibitions have been allowed to U.S. Dollar 5.00 million and to U.S. Dollar 1.00 million in case of export
promotion tours; and
• re-import of unsold items in case of participation in exhibitions United States of America has been
extended to 90 days.
Environmental and Labour Regulations
Depending upon the nature of the activities undertaken by our Company, applicable environmental and
labour laws and regulations include the following:
• Contract Labour (Regulation and Abolition) Act, 1970;
• Factories Act, 1948;
• Payment of Wages Act, 1936;
• Payment of Bonus Act, 1965;
• Employees’ State Insurance Act, 1948;
• Employees’ Provident Funds and Miscellaneous Provisions Act, 1952;
• Payment of Gratuity Act, 1972;
• Minimum Wages Act, 1948;
• Shops and Commercial Establishments Acts, where applicable;
• Environment Protection Act, 1986;
• Water (Prevention and Control of Pollution) Act, 1974; and
• Air (Prevention and Control of Pollution) Act, 1981.
Special Economic Zone Act, 2005
Special Economic Zone Act, 2005 is an act to provide for the establishment, development and
management of the Special Economic Zones. Major objectives of the SEZ Act include generation of
additional economic activity, promotion of export of goods and services, investment from domestic and
foreign sources and creation of employment opportunities.
98
Gujarat Special Economic Zone Act, 2004 was enacted to provide for the operation, maintenance,
management and administration of a Special Economic Zone and to constitute an Authority and for
matters Connected therewith or incidental thereto. The salient features of Gujarat Special Economic Zone
Act, 2004 includes a designated duty free enclave to be treated as foreign territory only for trade
operations and duties and tariffs, No license requirement for import, Allowance of Manufacturing, trading
or service activities, SEZ units to be positive net foreign exchange earner within three years, Domestic
sales subjected to full customs duty and import policy in force, Full freedom for subcontracting, Duty-free
goods to be utilised over the approval period of 5 years, No routine examination by customs authorities of
export/import cargo and Minimum size of multi-product SEZ, not to be less than 1000 hectares.
Special Economic Zone Rules 2006
The SEZ rules provide for simplification of procedures and for single window clearance on matters
relating to Central as well as State Governments for setting up of SEZs and a unit in SEZ. The SEZ
Rules also prescribe the procedure for the operation and maintenance of an SEZ, for setting up and
conducting business therein with an emphasis on self certification and the terms and conditions subject
to which entrepreneur and developer shall be entitled to exemptions, drawbacks and concessions etc.
The SEZ Rules also provide for the minimum area requirement for various categories of SEZs.
Foreign Exchange Management Act, 1999 (FEMA)
Foreign Exchange Management Act consolidates and amends the laws relating to foreign exchange with
the objective of Facilitating external trade and payments and for promoting the orderly development and
maintenance of foreign exchange market in India. Under the Industrial Policy and as per Notification
NO.FEMA 36/2001-RB dated February 27 2001, foreign direct investment up to 100% is permitted in the
gems and jewellery industry.
Further as per Press Note 9 of 2000- 100% FDI is permitted through Automatic Route for all
manufacturing activities in SEZs other than arms and ammunition , atomic substances, narcotic and
psychotropic substances, hazardous chemicals, distillation and brewing of alcoholic beverages,
cigarettes, cigars and tobacco substitutes.
Gem and Jewellery Export Promotion Council
The Government of India has designated the Gem and Jewellery Export Promotion Council (GJEPC) as
the importing and exporting authority in India in keeping with its international obligations under section IV
(b) of the Kimberley Process Certification Scheme (KPCS). The Kimberley Process is a joint government,
international diamond and civil society initiative to stem the flow of conflict diamonds, which are rough
diamonds used by rebel movements to finance wars against legitimate governments. The Kimberley
Process comprises participating governments that represent approximately 98% of the world trade in
rough diamonds.
The KPCS has been implemented in India from January 1, 2003 by the Government of India through
communication No. 12/13/2000-EP (GJ) dated November 13, 2002. The GJEPC has been notified as the
nodal agency for trade in rough diamonds under para 2.2, chapter 2 of the Export-Import Policy of India
(2002-2007). Accordingly, the verification and issuance of Kimberley Process certificates is administered
though the Mumbai and Surat offices of GJEPC.
Government of Maharashtra SEZ Policy
Various states including the state of Maharashtra have their own state SEZ policy. Government of
Maharashtra vide resolution number SEZ 2001/(152)/IND-2 dated October 12, 2001 promulgated the
Maharashtra SEZ Policy regarding setting up of special economic zones in Maharashtra which prescribes
the rules in relation to the various environmental clearances, water and power supply arrangements, state
taxes, duties, local taxes and levies and we are required to follow the state policy in addition to any
central policies.
99
Some of the major benefits available to units set up in SEEPZ include:
• a tax holiday as per the provision of the Income Tax Act,1961;
• duty free import of capital goods and equipment from preferred sources;
• exemption from customs duty on imported capital goods, raw materials, components, consumables,
spares, tooling and packaging materials;
• exemption from central excise duties and other levies on products manufactured within the zone;
• excise exemption on capital goods, raw materials, computers etc. procured from domestic tariff
area;
• special dispensations and relaxations in local laws and levies including octroi, sales taxes and
property tax;
• in house customs clearance;
• remittance of profits and dividends earned by foreign investors in the zone is allowed freely after
payment of taxes; and
• goods manufactured in the zone are permitted to be sold on payment of applicable duties.
100
History and Corporate Matters
The company C. Mahendra Infojewels Limited was formed in 2000 in the form of Partnership under the
name and style of C. Mahendra Infojewels to carry on the business of diamond, jewellery, gold, silver,
precious stones, studded jewellery and development of software and software exports by Mr. Shrikant
Parikh with Mr. Mahendra Shah and Mr. Champak Mehta. The company has started manufacturing unit of
diamond studded jewellery in Seepz Mumbai in the year 2000under SEZ scheme for a period of ten
years.
The constitution of the partnership firm was changed from time to time and in the year 2010 the partners
as on that date Mr. Shrikant Parikh, Mr. Jesingbhai Parikh, C. Mahendra Jewels Private Limited, Minal
Industries Limited, Minal Infracons Private Limited, Minal Infrastructure and Properties Private Limited and
Minal Lifestyles Private Limited agreed to convert the business of partnership firm in to Limited Company
Under the name and Style of C. Mahendra Infojewels Limited under Part IX of The Companies Act,1956
for which a certificate of Incorporation was issued on 10th August,2010 by Registrar of Companies,
Gujarat
For further details in relation to description of the activities, products, market of each segment, the growth
of our Company, exports and profits due to foreign operations together with the country-wise analysis,
standing of our Company with reference to the prominent competitors with reference to our products,
management, Technology, market, managerial competence and capacity built up and major suppliers
and customers refer to the chapter titled Business Overview Our Management and Section titled
Financial Information beginning on pages 87,103,126 respectively.
Main Objects of Our Company
Our main Objects as per the Memorandum of Association of the company are
1. To carry on the business as manufacturers, manufacturers’ representatives, factors, agents,
exporters, importers, whole sellers, retailers, dealers and distributors of all classes, kinds, types,
nature and description of diamonds, jewellery, gold, silver, platinum, precious and semi precious
stones and metals, studded jewellery, pearls, akiks, ornaments.
Changes in Registered Office of our Company:
There has been no change in the Registered office of the company since incorporation.
Changes in Memorandum of Association since Incorporation:Since Incorporation, the following changes have been made to Memorandum of Association of the
Company:
Date of Shareholders’
Approval
11.07.2011
Nature of Alteration
The authorized Share Capital of the company was increased from ` 30.00
Crores divided in to 3.00 Crore equity shares of ` 10/- each to ` 40.00
Crores divided in to 4.00 Crore equity shares of ` 10/- each
Major Events
Year
2000
2009
2010
Events
Incorporated as Partnership firm in the name of “ C. Mahendra Infojewels”
Setting up Unit No II for manufacturing gold and silver studded jewellery in Plot
No 16(P), 17, 28 & 29(P) SEEPZ-SEZ, Andheri ( East), Mumbai-400 096
Conversion of Partnership firm in to Limited company in the name and style C.
Mahendra Infojewels Limited under Chapter IX of The Companies Act,1956
101
2010
Approval for setting up Unit III for manufacturing of Jewellery and Trading of
Rough, cut, and polished Diamonds, gemstones
Subsidiaries
Our company does not have any subsidiaries as on the date of filing of the Draft Red herring Prospectus.
Injunction or restraining orders
Our company does not have any injunction or restraining orders as on the date of filing of the Draft Red
herring Prospectus.
Details regarding Acquisition of business/ undertakings, mergers, amalgamations, revaluation of
assets
Nil
Shareholders’ Agreements and any other agreements
Our company has not entered into any shareholders’ agreement or any other agreement as on the date
of filing of the Draft Red herring Prospectus.
Strategic/financial partner
Our company does not have any Strategic or/and financial partner as on the date of filing of the Draft Red
herring Prospectus.
Total number of shareholders of our company
The total shareholders of the company are 7 (Seven) as on date of filing of the Draft Red herring
prospectus. For more details on the shareholding of the members, please see the section titled “capital
Structure” at page No 43
102
Our Management
The Following table sets forth details regarding the Board of Directors as of the date of this Draft Red
Herring Prospectus:Name, Designation,
Father’s Name,
Occupation, DIN and
Term
Mr. Jesingbhai B.
Parikh
Designation:
Chairman
Age: 81 Years
S/o Badarmal Parikh
Occuation: Business
DIN : 01691567
Status: Executive and
Non Independent
Nationality: Indian
Experience:65 Years
Mr. Shrikant J. Parikh
Designation:
Managing Director
Age : 56 Years
S/o Jesingbhai B.
Parikh
Occupation: Business
DIN : 00112642
Status: Executive and
Non Independent
Nationality: Indian
Experience: 26 years
Address
Qualificati
on
Date of
Appointment
& Tenure
Other Directorships
21,
Dhanushya
Society,
Sama
Road,
Vadodara
390008
B.A.
LL.B
Date
of
appointment
as
Chairman
16/08/2010
-Minal Industries Ltd
-Minal Exim Pvt. Ltd
-Minal Infracons Pvt.
Ltd.
-Minal Lifestyle Pvt
Ltd
-Minal Infrastructure
& Properties Pvt. Ltd
-C.Mahendra jewels
Pvt. Ltd
Mrs. Sona A. Parikh
Designation: Whole
Time Director
Age: 25
W/O : Akash V Parikh
Occupation:
Business
Status: Executive
Nationality: Indian
DIN: 03283751
Experience 1 year
21, hanshya Soc,
Nr. Chankayapuri
Soc, New Sama
Road, Vadodra 390008
Tenure:
Liable to retire
by rotation
601/1
Minal
Complex
Opp
SakhiVihar
Road
Powai
Andheri
(East)
Mumbai
400072.
B.E
Electrical
Date
of
appointment as
M.D
16/08/2010
Tenure:
16/08/2010 to
15/08/2015
Chartered
Accountant
Date
of
appointment as
WTD:
24/01/2012
Tenure:
24/01/2012
to
23/01/2014
103
- Minal Industries Ltd.
- Affinity Investment
Pvt. Ltd.
- Minal Exim Pvt. Ltd.
- Minal Lifestyle Pvt.
Ltd.
- Minal Infracon Ltd.
- Minal Infrastructure
& Properties Pvt. Ltd.
- Clicksmetro online
Pvt. Ltd.
- C. Mahendra
Jewels Pvt. Ltd.
- Clicksmetro online
Pvt. Ltd
- Affinity Investment
Pvt. Ltd
- Minal Lifestyle Pvt.
Ltd
- Minal Infrastructure
& Properties Pvt. Ltd
- Minal Infracons Pvt
Ltd
- Minal Exim Pvt. Ltd.
Mr. Shankar P.
Bhagat
Age:60 Years
S/o: Ramdeo
Bhagat
B-9, Goyal Plaza,
Judges
Chartered
Accountant
Bunglow Road,
Vastrapur,
Ahmedabad – 380
015,
Gujarat, India.
Date of
appointment:
22/12/2011
Tenure:
Liable to retire
by rotation
- Amradeep
industries limited
- Turbotech
engineering limited
- Kappac Pharma
Limited
- Saral Mining Limited
- Pressure Sensitive
System India Limited
- Monotona securities
limited
- Rushil Décor
Limited
Designation:
Independent
Director
DIN No: 01359807
Occupation:
Profession
Nationality: Indian
Experience 27 years Vithals Bachelor of Date of
Mr. Malay S. Karbhari Jogidas
Pole
Law
and appointment:
Designation:
Raopura
Bachelors
27/07/2011
Independent Director
Vadodara – 390001 of
Age: 56 Years
Commerce
S/O
:
Suryakant
Karbhari
Occupation:
Tenure:
Business
Liable to retire
Din: 02940417
by rotation
Status: Non Executive
And Independent
Nationality: Indian
Experience:37
Amidhara Post
Date of
- Minal Industries
Mr. Amulbhai J. Patel A/20
Society,
Graduate
appointment:
Limited
Designation:
Near Prabhunagar Diploma in
Bay
Overseas
Independent Director
Colony,
Business
27/07/2011
Limited
Age: 51 Years
Manageme
S/o
:
Jethabhai Waghodia Road,
Vadodara- 390019
nt
Tenure:
Revabhai Patel
Liable to retire
Occupation:
by rotation
Business
DIN: 00183464
Status: Non Executive
and Independent
Nationality: Indian
Experience: 29
Note: None of the above mentioned Directors are on the RBI List of willful defaulters as on date and are
acting or have acted as directors in the preceding five years of any listed company whose shares have
either been suspended from trading by stock exchanges and/or under any order or directions issued by
the stock exchanges or any company who is delisted from the stock exchanges in the preceding five
years.
There is no arrangement or understanding with major shareholders, customers, suppliers or others,
pursuant to which any of the above mentioned Directors was selected as director or member of senior
management.
There is no service contracts entered into by the directors with the issuer providing for benefits upon
termination of employment.
104
BRIEF PROFILE OF THE DIRECTORS OF OUR COMPANY
Mr. Jeshinglal Parikh
Jesingbhai Parikh aged 81, B.A. LL.B.; is the Chairman of Our Company. He has worked for 28 years as
civil servant at various levels. He started his carrier in 1947, as a Mamlatdar of Palanpur, Gujarat. He was
a Director of Civil Supplies in Sachivalaya for 10 years and has worked as a Mamlatdar of Baroda,
Gujarat. In 1975. He was promoted as Dy. Collector of Baroda. Where he served for three years. He has
also worked for Indian Petrochemicals Limited, Baroda, as a Senior Manager (Personnel &
Administration) for 10 years. Since 1988 he is looking after the family business. He is looking after the
personnel and administration and financial matters of the Company.
Mr. Shrikant Jesingbhai Parikh – Managing Director
Shrikant Parikh aged 56 years is B.E Electrical from M. S. University Baroda is the key person behind this
company. He is looking after overall activities. He has started his career as Engineer in Asea Brown
Boveri (ABB). He is also director in Minal Engineering Limited, a listed company on Mumbai, Ahmedabad
and Vadodara Stock exchange. He has ventured in jewelry business in the year 1993 and along with
Mahendra shah and Champakbhai Mehta and started C Mahendra Jewels Private Limited in Seepz
Andheri, Mumbai. He has started unit of manufacturing Diamond studded jewelry in October 2000 in new
bigger premises and with modern machinery’s in Seepz as a partnership firm as C Mahendra InfoJewels.
In the year 2010 the partnership form got converted into Limited Company.
Mrs. Sona Akash Parikh- Whole Time Director
Sona Parikh, aged 25 years is the Chief Financial Officer of the company. She is a Chartered Accountant
by profession. She has completed her education in the year 2009 and joined the family business as
finance in charge. Apart from finance she is looking after the procurement of diamond, silver and gold.
She was appointed as Whole Time Director on Our Board on January 24, 2012 for the period of 2 Years
Mr. Amulbhai Jethabhai Patel - Independent Director
Mr. Amulbhai Jethabhai Patel aged 50 years is the independent director of the company. He is Graduate
Mechanical Engineer and post Graduate in Business Management. He has been awarded Gold Medal in
the post graduate Diploma in Business management .He has got experience in the field of Engineering
and Management. He has worked as engineer with Hindustan Brown Boveri Limited and Hindustan
Motors Limited. He was appointed as independent director on our board as on July 27, 2011
Mr. Malaybhai Suryakant Karbhari - Independent Director
Mr. Malaybhai Suryakant Karbhari aged 51 years is the independent director holds the degree of
Bachelor of commerce and bachelors of laws from M.S.University – Vadodara. He has taken LIC Agency
and working as Insurance Consultant since 1975 having a versatile experience and knowledge in all
types of insurances i.e. all type of life insurance and general insurances. At an early age, he has achieved
high targets set up by LIC and is a member of Chairman’s Club, i.e. club set up by LIC, since last 28
years He is the Trustee of Kedar Art Research Centre and Gotre Road. Shwetambar Jain Sangh,
Vadodara. He was appointed as independent director on our board as on July 27, 2011
Mr. Shankar Prasad Bhagat – Independent Director
Mr. Shankar Prasad Bhagat aged, 60 years Independent Director holds a Chartered Accountant
Certificate from Institute of Chartered Accountants of India (ICAI) having more than 27 years of
experience in the field of accounts and finance. He was appointed as Independent Director on Our Board
on December 12th, 2011.
105
BORROWING POWERS OF THE BOARD
The borrowing powers of our Directors are regulated by the Articles of Association of our Company.
The Board of Directors of our Company has power to borrow up to ` 100 crores as per the shareholders
resolution passed in the EGM of our Company held on February 14 2012. The extract of the resolution of
our Company authorizing the Board’s borrowing powers is given herein below:
“RESOLVED THAT pursuant to the provisions of Section 293(1)(d) of the Companies Act, 1956 the
Company hereby approves and gives consent to the Board of Directors for borrowing moneys from time
to time in excess of the paid up capital and free reserves, if any, provided however, that the amount
borrowed/to be borrowed and outstanding at any time shall not exceed the sum of ` 100,00,00,000/(Rupees One Hundred Crores Only) exclusive of the temporary loans obtained from the Company’s
bankers in the ordinary course of business of the Company.
For Further details of the provisions of our Articles of Association regarding borrowing powers, please
refer to the section titled “Main provisions of the Articles of Association” of our Company, beginning on
page no. 247 of the Draft Red Herring prospectus.
COMPENSATION AND REMUNERATION TO OUR MANAGING DIRECTOR AND WHOLE TIME
DIRECTOR.
Our Directors, as mentioned below have not entered into any service contract (which provides for benefits
upon termination of employment) with our Company:
Name of the Director
Designation
Compensation paid for
Fiscal 2011
Mr. Jesingbhai Parikh
Chairman
Nil
Mr. Shrikant Parikh
Managing director
Nil
Mrs. Sona Parikh
Whole Time Director
15000* P.M
*The appointment of Mrs. Sona Parikh was made Whole Time Director by Board Resolution
dated December 26, 2011 and was approved by shareholders at the EGM held on January 24,
2012.
Terms of appointment of our Executive Directors
1. Terms of appointment and compensation of Mr. Shrikant Parikh, Managing Director is as
follows:Mr. Shrikant Parikh has been appointed as Managing Director of the Company for a period of 5 years
w.e.f. 16.08.2010. The Remuneration paid is NIL. The said appointment was made by the Board
Resolution passed on 16.08.2010.
The significant terms of appointment as contained in the resolution are as follows:Particulars
Salary
Perquisites and Allowances
Minimum Remuneration
Term
Other Condition
Remuneration
Nil
Nil
Nil
5 years
Nil
106
2. Terms of appointment and compensation of Mrs. Sona Parikh, Whole Time Director is as
follows:Mrs. Sona Parikh has been appointed as Whole Time Director of the Company for a period of 2 years
w.e.f. 24.01.2012. The Remuneration paid is ` 15,000 per month inclusive of all perquisites, fees,
commissions or allowance, if any, but subject to approval of Remuneration Committee of the
Company from time to time, has been made by the Board Resolution passed on 26.12.2011 which
was approved by shareholders at the EGM held on 24.01.2012.
The significant terms of appointment as contained in the resolution are as follows:Particulars
Salary
Perquisites and Allowances
Minimum Remuneration
Term
Other Condition
Remuneration
Nil
Nil
` 15, 000 p.m
2 years
Nil
SITTING FEES PAYABLE TO NON-EXECUTIVE DIRECTOR
Till date we have not paid any sitting fees to our Non-Executive Director.
RELATIONSHIP BETWEEN DIRECTORS
Name
Mr. Jesingbhai Badarmal Parikh
Mr. Shrikant Jesingbhai Parikh
Mrs. Sona Akash Parikh
Relationship
Father of Shrikant Jesingbhai Parikh
Son of Jesingbhai Badarmal Parikh
Daughter in Law of Shrikant Parikh’s Brother
(Vikram Parikh)
POLICY ON DISCLOSURES AND INTERNAL PROCEDURE FOR PREVENTION OF INSIDER
TRADING
The provisions of Regulation 12 (1) of the SEBI (Prohibition of Insider Trading) Regulations, 1992 will be
applicable to our Company immediately upon the listing of its Equity Shares on the Stock Exchanges.
Mr. Akash V. Parikh, acting as the Compliance Officer and Ms. Shradha Bhimani, acting as Company
Secretary respectively are responsible for setting forth policies, procedures, monitoring and adherence to
the rules for the preservation of price sensitive information and the implementation of the code of conduct
under the overall supervision of the Board.
SHAREHOLDING OF THE DIRECTORS
The Articles of Association do not require the Directors to hold any qualification Equity Shares. The
following table details the shareholding of the Directors in their personal capacity, as on the date of this
Draft Red Herring Prospectus.
Sr. No.
1
2
3
4
5
6
Name of the Director
Mr. Jesingbhai Parikh
Mr. Shrikant Parikh
Mrs. Sona Parikh
Mr. Amulbhai Patel
Mr. Malaybhai Karbhari
Mr. Shankar Bhagat
No. of Shares
1,87,500
1,22,75,000
Nil
Nil
Nil
Nil
107
% of Paid up Capital
00.75
49.10
Nil
Nil
Nil
Nil
INTEREST OF DIRECTORS
All our Directors may be deemed to be interested to the extent of fees payable to them for attending
meetings of the Board, commission payable to our Independent non-executive Directors as well as to the
extent of remuneration payable to our executive Directors for their services as executive directors of our
Company , reimbursement of expenses payable to them under our Articles of Association and lease rent
of ` 12000 payable annually to Minal Plastic product on the leasehold property taken on leasehold
basis. All our Directors may also be deemed to be interested to the extent of Equity Shares, if any,
already held by them or their relatives or firms, trusts or other entities/ bodies corporate in which they
have interest, and also to the extent of any dividend payable to them and other distributions in respect of
the said Equity Shares. Our non-Promoter Directors may also be deemed to be interested in the Equity
Shares, if any, out of the present Issue that may be subscribed by and Allotted/transferred to the
companies, firms and trusts and other entities/bodies corporate in which they are interested as Directors,
members, partners and/or trustees or otherwise as also any benefits, monetary or otherwise derived there
from.
Further, save and except as stated otherwise in the Chapters titled ”Business Overview”, “Our Promoters
and their Background” and Section titled “Financial Information” beginning on pages 87, 116, and 126,
respectively, of the Draft Red Herring Prospectus, our Directors do not have any other interests in our
Company as on the date of the Draft Red Herring Prospectus.
Interest as to Property
Except as stated/referred to in the paragraph titled “Property” beginning on page 95 of the Draft Red
Herring Prospectus, our Directors do not have any interest:
1. In the promotion of our Company; or
II. In any property acquired by our Company within two years from the date of the Draft Red Herring
Prospectus, or proposed to be acquired by our Company.
CHANGES IN THE BOARD OF DIRECTORS DURING THE LAST THREE YEARS
Name
Date
of
Appointment
August 10, 2010
Shrikant
Jesingbhai
Parikh
Jesingbhai
Badarmal
Parikh
Arpita Shrikant Parikh
August 10, 2010
Malay Suryakant Karbhari
July 27,2011
Amulbhai
Jethaibhai
Patel
Sona Akash Parikh
July 27,2011
July 27, 2011
Shankar Prasad Bhagat
December 12, 2011
Date
Cessation
of
Remarks
Appointed as First Director
August 10, 2010
Appointed as First Director
December
2011
22,
Due to pre occupation elsewhere
Appointed
Director
Appointed
Director
Appointed
Director
Appointed
Director
as
Independent
as
Independent
as
as
Whole
Time
Independent
Composition of Board of Directors
The Board of Directors of our Company has an optimum combination of executive and non-executive
Directors as envisaged in Clause 49 of the Listing Agreement. Our Board has 6 Directors out of which 3
are independent directors in accordance with the requirement of Clause 49 of the Listing Agreement of
the Stock Exchanges.
108
Sr. No
Board of Directors
Designation
1. Jesingbhai Badarmal
Chairman
Parikh
2. Shrikant
Jesingbhai Managing Director
Parikht
3. Sona Akash Parikh
Whole Time Director
4.
5.
6.
Malay
Suryakant Director
Karbhari
Amulbhai
Jethaibhai Director
Patel
Shankar Prasad
Director
Bhagat
Category
Non Executive and NonIndependent Director
Executive and NonIndependent Director
Executive and NonIndependent Director
Non Executive Independent Director
Non Executive Independent Director
Non Executive Independent Director
DIN
01691567
00112642
03283751
02940417
00183464
01359897
CORPORATE GOVERNANCE
The provisions of the Listing Agreement to be entered into with the Stock Exchanges with respect to
corporate governance and the SEBI Rules and Regulations in respect of corporate governance become
applicable to the Company at the time of seeking in-principal approval of Stock Exchanges. Our company
has taken steps to comply with such provisions, as contained in Equity Listing agreement, particularly
those related to composition of Board of Directors, constitution of committees like Audit Committee,
Shareholder / Investor Grievance Committee etc., Further our company undertakes to take all necessary
steps to comply with all the requirements of the regulations on corporate governance and adopt corporate
governance code as per Clause 49 of listing agreement to be entered with Stock Exchanges.
In terms of Clause 49 of Listing Agreement, our company has already appointed Independent
Directors and constituted the following Committees of the Board:
1. Audit Committee.
2. Share Holders/ Investors Grievance Committee.
3. Remuneration Committee.
1. Audit Committee:
The constitution of Audit Committee was approved at a meeting of the Board of Directors held on
19.01.2012.
The terms of reference of Audit Committee comply with the requirements of Clause 49 of the Listing
Agreement, which will be entered into with the Stock Exchanges in due course. The committee consists
of the following Directors:
Name of the Director
Shankar Prasad Bhagat
Malay Suryakant Karbhari
Sona Akash Parikh
Designation
Chairman
Member
Member
Nature of Directorship
Independent director
Independent director
Executive director
Our Company Secretary, Ms. Shradha Bhimani will act as the secretary of the Committee.
ROLE OF AUDIT COMMITTEE
a) Overseeing the Company’s financial reporting process and disclosure of its financial information;
b) Recommending to the Board the appointment, re-appointment, and replacement of the statutory
auditor and the fixation of audit fee;
c) Approval of payments to the statutory auditors for any other services rendered by them;
109
d) Reviewing, with the management, the annual financial statements before submission to the Board
for approval, with particular reference to:
i.
Matters required to be included in the Director’s Responsibility Statement to be included
in the Board’s report in terms of clause (2AA) of section 217 of the Companies Act, 1956;
ii.
Changes, if any, in accounting policies and practices and reasons for the same;
iii.
Major accounting entries involving estimates based on the exercise of judgment by
management;
iv.
Significant adjustments made in the financial statements arising out of audit findings;
v.
Disclosure of any related party transactions; and
vi.
Qualifications in the draft audit report.
e) Reviewing, with the management, the quarterly, half-yearly and annual financial statements
before submission to the Board for approval;
f)
Reviewing, with the management, the performance of statutory and internal auditors, and
adequacy of the internal control systems;
g) Reviewing the adequacy of internal audit function, if any, including the structure of the internal
audit department, staffing and seniority of the official heading the department, reporting structure
coverage and frequency of internal audit;
h) Discussion with internal auditors any significant findings and follow up there on;
i)
Reviewing the findings of any internal investigations by the internal auditors into matters where
there is suspected fraud or irregularity or a failure of internal control systems of a material nature
and reporting the matter to the Board;
j)
Discussion with statutory auditors before the audit commences, about the nature and scope of
audit as well as post-audit discussion to ascertain any area of concern;
k) reviewing with the management, the statement of uses/ application of funds raised through an
issue (public issue, rights issue, preferential issue, etc), the statement of funds utilized for
purposes other than those stated in the offer document/ prospectus/ notice and the report
submitted by the monitoring agency monitoring the utilization of the proceeds of a public or rights
issue, and making appropriate recommendations to our Board to take up steps in this matter;
l)
To look into the reasons for substantial defaults in the payment to the depositors, debenture
holders, shareholders (in case of non-payment of declared dividends) and creditors;
m) Reviewing the functioning of the whistle blower mechanism, in case the same is existing;
n) Review of management discussion and analysis of financial condition and results of operations,
statements of significant related party transactions submitted by management, management
letters/letters of internal control weaknesses issued by the statutory auditors, internal audit
reports relating to internal control weaknesses, and the appointment, removal and terms of
remuneration of the chief internal auditor;
o) Carrying out any other function as is mentioned in the terms of reference of the Audit Committee
from time to time; and
110
p) Such other matters as May from time to time be required by any statutory, contractual or other
regulatory requirements to be attended to by such committee.
POWER OF THE AUDIT COMMITTEE
1. To investigate activity within its terms of reference;
2. To seek information from any employees;
3. To obtain outside legal or other professional advice; and
4. To secure attendance of outsiders with relevant expertise, if it considers necessary.
2. Shareholders/ Investor’s Grievances Committee
The Shareholders’ / Investors’ Grievance Committee has been formed by the Board of Directors at the
meeting held on 19.01.2012 in compliance with Clause 49 of the Listing Agreement. The Shareholders’ /
Investors’ Grievance Committee has been constituted with the following Directors:
Name of the Director
Malay Suryakant Karbhari
Amulbhai Jethaibhai Patel
Shankar Prasad Bhagat
Designation
Chairman
Member
Member
Nature of Directorship
Independent director
Independent director
Independent director
Our Company Secretary, Ms. Shradha Bhimani will act as the secretary of the Committee.
FUNCTIONS OF SHAREHOLDERS’/ INVESTORS’ GRIEVANCES COMMITTEE
1. To take action for efficient transfer of shares; including review of cases for refusal of transfer/
transmission of shares and debentures;
2. Redressal of shareholder and investor complaints like transfer of shares, non-receipt of balance
sheet, non-receipt of declared dividends, duplicate share certificates, interest, notices etc.;
3. Issuance of duplicate / split / consolidated share certificates;
4. To take effective action for allotment and listing of shares;
5. To monitor, under the supervision of the Company Secretary, the complaints received by the
Company from SEBI, Stock Exchanges, Department of Company Affairs, ROC and the Share/
Debentures/ Security holders of the Company etc., and the action taken for redressal of the same.
6. To monitor and expedite the status and process of dematerialisation and rematerialisation of shares,
debentures and securities of the Company.
7. To do all such acts, things, or deeds as may be necessary or incidental to the exercise of the above
powers.
To suggest statutory and regulatory authorities regarding investor grievances; and make sure proper and
timely attendance and redressal of investor queries and grievances.
3. Remuneration Committee
The constitution of the Remuneration Committee was approved at a meeting of the Board of Directors
held on 19.01.2012.
111
The terms of reference of Remuneration Committee comply with the requirements of Clause 49 of the
Listing Agreement, which will be entered into with the Stock Exchanges in due course. The committee
consists of 3 Independent Directors.
Name of the Director
Amulbhai Jethaibhai Patel
Malay Suryakant Karbhari
Shankar Prasad Bhagat
Designation
Chairman
Member
Member
Nature of Directorship
Independent Director
Independent Director
Independent Director
Our Company Secretary, Ms. Shradha Bhimani will act as the secretary of the Committee.
FUNCTIONS OF REMUNERATION COMMITTEE
1. To recommend to the Board, the remuneration of Managing / Whole-time / Executive Directors,
including all elements of remuneration (i.e. salary, benefits, bonuses, perquisites, commission,
incentives, stock options, pension, retirement benefits, details of fixed component and
performance linked incentives along with the performance criteria, service contracts, notice
period, severance fees etc.);
2. To be authorised at it’s duly constituted meeting to determine on behalf of the Board of Directors
and on behalf of the shareholders with agreed terms of reference, the Company’s policy on
specific remuneration for Company’s Managing / Whole-time / Executive Directors.
3. To decide on overall compensation policy for non-executive Directors;
4. To attend to any other responsibility as may be entrusted by the Board within the terms of
reference.
112
Manageme
ent Organiza
ational Structture
Shrikant Pa
arikh
M
Managing
Diirector
Produ
uction Manager
M
Marketing
& Sales
S
Administration & Fin
nance
Manager
Floor Managers
Supervisors For
F
Manager
anager
Ma
Manager
Manager
Purchase
Exxports
Accounts
Administrative
Marketing
Staff
Va
arious Departtment
Exe
ecutives
Staff
113
OUR KEY MANAGEMENT PERSONNEL
The Key Managerial Personnel of our Company other than our Executive Directors and Promoters are as
follows:Name, Age, Designation and
Date of Joining
Mr. Anil Kumar S Nair
Age: 45
Designation : Maintance Manager
DOJ: june 01,2000
Mr. Sanjay Phulchandbhai
Notaria
Age: 39
Designation: Diamond Manager
DOJ : September 01,2003
Mr. Santosh Madhukar Panchal
Age: 43
Designation: General Manager
DOJ : August 01,2005
Mr. Vivek Manohar Pawaskar
Age:39
Designation :Manager Import/
Export
DOJ : July 01,2004
Mr. Kalpesh Panchal
Age: 32
Designation: PDDC Manager
DOJ : January 17, 2011
Mr.Akash Parikh
Age:26
Designation : Complaince Officer
DOJ :August 03,2011
Ms. Shradha Bhimani
Age:25
Designation : Company Secretary
DOJ :December 12,2011
Qualification
ITI Electrical
(Kerala)
-
Diploma in
mechanical
engineering
Previous
Employment
Overall
Experience
Su-Raj Diamond
28
Remuneration in
` from 1.04.2010
Till 31.03.2011
241937
C. Mahendra
Jewels Private
Limited
12
300880
Diastar
Jewellery Ltd
21
568925
15
137934
12
Nil
Nil
S. Y B.Com
Diploma
Jewellery
Designing
Nil
in
Basic jewellery
India private
limited
M.B.A
Marketing
Fresher
1
Company
Secretary
Gokul Refoils
and Solvent
Limited
2
Nil
Note:
™ All the key managerial personnel mentioned above are on the payrolls of our Company as
permanent employees.
™ There is no understanding with major shareholders, customers, suppliers or others pursuant to
which any of the above mentioned personnel have been recruited.
™ The key managerial personnel as disclosed above are not key managerial personnel as defined
under Accounting Standard 18.
The details of our key managerial personnel are set out below:
Relationship of Key Managerial Person with Promoter/ Directors
All the Key Management Personnel are permanent employees of our Company and other than Mr.
Akashk parikh, none are related to each other or any Director within the meaning of Section 6 of the
Companies Act.
114
Service Contracts
No Service contracts have been entered into with any Key Management Personnel or Director for
provision of benefits or payments of any amount upon termination of employment.
Shareholding of the Key Management Personnel
None of the Key Management Personnel hold any Equity Shares in our Company.
Bonus or Profit sharing plan for the Key Management Personnel
The Company does not have any profit sharing plan with its Directors or its key managerial personnel.
The Company awards performance linked bonuses, as part of remuneration, to its key managerial
personnel.
Interest of Key Management Personnel
Except as disclosed in this chapter and as disclosed under “Annexure XI” beginning on page 140 of the
Draft Red Herring Prospectus, none of our key managerial personnel have any interest in our Company
other than to the extent of remuneration or benefits to which they are entitled as per their terms of
appointment and reimbursement of expenses incurred by them during the ordinary course of business
and to the extent of Equity Shares held by them in our Company. We have not paid /given any benefit to
the officers of our Company, within the two preceding years nor do we intend to make such payment/give
such benefit to any officer as on the date of the Draft Red Herring Prospectus.
Changes in the Key Management Personnel
The following are the changes in the Key Management Personnel in the last three years preceding the
date of filing this Draft Red Herring Prospectus otherwise than by way of retirement in due course.
Name
Kalpesh Panchal
Akash Parikh
Shradha Bhimani
Date of Appointment
January 17, 2011
August 03,2011
December 22, 2011
Date of Cessation
-
Reason/ Remarks
Appointed as PDDC Manager
Appointed as Compliance Officer
Appointed as Company Secretary
Employee Stock Option Scheme
As on the date of Filing of DRHP, company does not have any ESOP Scheme for its employees.
Relation of the Key Managerial Personnel with our Promoters/ Directors
Other than Mr. Akash Parikh None of our Key Managerial Personnel are related to our
Promoters/Directors.
Turnover of our Key Management Personnel
The average turnover of our Key Management Personnel is very negligible.
Payment of Benefit to Officers of our Company (non-salary related)
Except the statutory payments made by our Company, in the last two years, our company has not paid
any sum to its employees in connection with superannuation payments and ex-gratia/ rewards and has
not paid any non-salary amount or benefit to any of its officers
115
OUR PROMOTERS AND THEIR BACKGROUND
The Following are promoters of our Company
1. Mr. Shrikant Jesingbhai Parikh
2. Mr. Jesingbhai Badarmal Parikh
3. Minal Industries Limited
4. C Mahendra Jewels Private Limited
Details of Individual Promoters
1. Mr. Shrikant Jesingbhai Parikh
Shrikant Parikh aged 56 years an Electrical Engineer from M. S. University Baroda is the key person
behind this company. He is looking after overall activities. He has started his career as Engineer in
Asea Brown Boveri (ABB). He is also director in Minal Industries Limited, a listed company on
Mumbai, Ahmedabad and Vadodara Stock exchange. He has ventured in jewelry business in the year
1993 and along with Mahendra shah and Champakbhai Mehta started C Mahendra Jewels Private
Limited in Seepz Andheri, Mumbai. He has started unit of manufacturing Diamond studded jewelry in
October 2000 in new bigger premises and with modern machinery’s in Seepz as a partnership firm as
C Mahendra Info Jewels
Identification Particulars
Details
PAN
ADBPP3870H
Passport No
Z1817991
Name of the Bank
Corporation Bank
Bank Account Number(Corporation Bank)
0543/SB/01/101378
116
2. Mr. Jesingbhai Badarmal Parikh
Jesingbhai Parikh aged 81, B.A. L.L.B.; is the Chairman of the Company. He has worked for 28 years
as civil servant at various levels. He started his carrier in 1947, as a Mamlatdar of Palanpur, Gujarat.
He was a Director of Civil Supplies in Sachivalaya for 10 years and has worked as a Mamlatdar of
Baroda, Gujarat. In 1975, He was promoted as Dy. Collector of Baroda. Where he served for three
years. He has also worked for Indian Petrochemicals Limited, Baroda, as a Senior Manager
(Personnel & Administration) for 10 years. Since 1988 he is looking after the family business. He is
looking after the personnel and administration and financial matters of the Company.
Identification Particulars
Details
PAN
ADBPP3889N
Passport No
E6011359
Voter ID Number
HDG8055527
Name of the Bank
Bank of India
Bank Account Number
250510110003608
Promoter Company
3. Minal Industries Limited
Particulars
Date of Incorporation
CIN
Registered Office
PAN
Bank Account
Nature of Business
Details of Company
January 11, 1988
L3201MH1988PLC216905
603,A-Wing Minal Complex off Saki Vihar Road Andheri East Mumbai
Maharashtra 400072
AABCM3120D
007120110000006 Bank of India, SEEPZ
Dealer in Engineering Tools and to deal in bullion, gold, platinium, silver,
and metals of every discription and object
History of the Company
Minal Industries Limited was originally incorporated with the Name Minal Electro Tools Private Limited on
January 11, 1988 with registrar of the company Dadra & Nagar Haveli Gujarat. Pursuant to name change
from Minal Electro Tools Private Limited to Minal Electro Tools Limited the fresh incorporation certificate
received by company on September 30th, 1993. Fresh certificate of incorporation received consequent
upon name change from Minal Electro Tools Limited to Minal Engineering Limited dated October 29th,
1993. Fresh certificate of incorporation consequent of name change from Minal Engineering Limited to
Minal industries limited received dated March 23, 2010.
117
Shareholding Pattern of Promoter Company as on 31.12.2011
Categ
ory
code
(I)
(A)
(1)
(a)
(B)
(a)
(b)
(c)
Category of
shareholder
(II)
Shareholding of
Promoter and
Promoter Group
Indian
Individuals/ Hindu
Undivided Family
Sub-Total (A)
Total Shareholding
of Promoter and
Promoter Group (A)
Public shareholding
Non-institutions
Bodies Corporate
Individuals i. Individual
shareholders holding
nominal share capital
up to ` 1 lakh.
ii. Individual
shareholders holding
nominal share capital
in excess of ` 1 lakh.
Any Other (specify)
(a) N.R.I. (Repat &
Non-Repat.)
(b) Foriegn Corporate
Bodies
(c) Trust
(d) Hindu Undivided
Family
(f) Employee
(h) Clearing Members
Total Public
Shareholding (B)
TOTAL (A)+(B)
Number
of
sharehol
ders
(III)
Total
number
of shares
Number of
shares
held in
dematerial
ized form
(IV)
(V)
Total shareholding
as a percentage of
total number of
shares
As a
percentag
e of (A+B)
(VI)
As a
percent
age of
(A+B+C
)
(VII)
Shares Pledged
or otherwise
encumbered
Numbe
r of
shares
As a
perce
ntage
(VIII)
(IX)=
(VIII)/(
IV)*10
0
4
4
36518205
36518205
36518205
36518205
50.79%
50.79%
50.79%
50.79%
Nil
Nil
Nil
Nil
4
36518205
36518205
50.79%
50.79%
Nil
Nil
112
21836504
3019834
30.37%
30.37%
1749
5696836
5404756
7.92%
7.92%
40
6948260
5856260
9.66%
9.66%
49
165728
165728
0.23%
0.23%
1
3330
3330
80
731787
731787
1.02%
1.02%
2031
35382445
15181695
49.21%
2035
71900650
51699900
100.00%
49.21%
100.00
%
118
(C)
(1)
(2)
Shares held by
Custodians and
against which
Depository Receipts
have been issued
Promoter and
Promoter Group
Public
GRAND TOTAL
(A)+(B)+(C)
2035
71900650
51699900
100.00%
100.00
%
The Board of Directors of the company comprises of
Sr. No
1.
2.
3.
4.
5.
Name
Shrikant Jesingbhai Parikh
Amul Kumar Jethabhai Patel
Arpita Shrikant Parikh
Jesingbhai Badrmal Parikh
Vikram Jeshinglal Parikh
Designation
Director
Independent Director
Director
Director
Director
On account of resignation of J.V. Joshi Independent director of the company in the month of June, 2011,
there is violation of clause 49 of the Listing Agreement from June ,2011. However the company is in
process of restructuring constitution of board so as to comply the clause 49 of Listing Agreement.
Brief Consolidated Audited Financial of last three year
(` In crores)
Particular
Equity Share Capital
Reserves
Sales
Profit after Tax
EPS ( in `.)
Net Asset Value ( in `.)
31/03/2009
31/03/2010
7.13
4.17
0.95
1.96
3.07
17.72
31/03/2011
7.13
10.20
67.20
6.78
6.38
16.32
14.38
54.89
488.94
32.45
26.34
56.23
4. C. Mahendra Jewels Private Limited
Particulars
Date of Incorporation
CIN
Registered Office
PAN
Bank Account
Nature of Business
Details of Company
January 01,1992
U15200MH1992PTC064699
G-40, Prime Mall Ground Floor, Irla, Vile Parle West Mumbai Maharashtra
AACC1477C
007120100100178 Bank of India, SEEPZ
To deal in Gems and Jewelleries
History of the Company
C Mahendra Diamond Jewelllery Private Limited was incorporated on January 02, 1992 with registrar of
the company Mumbai, Maharashtra. Pursuant to name change from C Mahendra Diamond Jewelllery
Private Limited to C Mahendra Jewels Private Limited the fresh incorporation certificate received by
company on January 20th, 1994.The company has manufactured diamond studded jewellery for 10 years
and exported the goods to USA.
119
The Board of Directors of the company comprises of 7directors
Sr. No
1.
2.
3.
5.
6.
7.
Name
Mahendra Chandulal Shah
Champak Kiritlal Mehta
Pravin kiritlal Mehta
Shrikant Jesingbhai Parikh
Arpita Shrikant Parikh
Jesingbhai Badamal Parikh
Designation
Director
Director
Director
Director
Director
Director
Shareholding Pattern of Promoter Company as on 30.09.2011
Sr. No
5.
6.
7.
8.
Name of the Shareholders
Mahendra Chandulal Shah
Champak Kirtilal Shah
Jesingbhai Badramal Parikh
Nirvani Trust
Total
No. of Shares
5,25,000
5,25,000
9,75,000
9,75,000
30,00,000
% of Total Holding
17.50
17.50
32.50
32.50
100.00
Confirmations
We confirm that the details of the permanent account numbers, bank account numbers and passport
numbers of our Promoters has been submitted to the Stock Exchanges at the time of filing the Draft Red
Herring Prospectus with the Stock Exchanges.
Further, we confirm that Permanent Account Number, Bank Account Number, Company Registration
Number and addresses of Registrars of Companies where the company is registered have been
submitted to the Recognized Stock Exchanges at the time of filing the Draft Red Herring Prospectus with
the Stock Exchanges.
Further, our Promoters have confirmed that they have not been declared as willful defaulters by the RBI
or any other governmental authority and there are no violations of securities laws committed by them in
the past or are currently pending against them.
Additionally, none of the Promoters have been restrained from accessing the capital markets for any
reasons by the SEBI or any other authorities.
For details pertaining to other ventures of our Promoters refer chapter titled “Financial Information of our
Group Companies” beginning on page 149 of the Draft Red Herring Prospectus.
Relationship of Promoters with each other and with our Directors
Name of the Promoter
Shrikant Jesingbhai Parikh
Jesingbhai Badarmal Parikh
Relationship
Son of Jesingbhai Badarmal Parikh
Father of Shrikant Jesingbhai Parikh
Common Pursuits
Our Group Companies namely C. Mahendra Jewels Pvt. Ltd., Minal Industires Ltd. & Minal Exim Private
Ltd. have objects similar to those of our Company. To that extent we may have a potential conflict of
interest between the said Group Companies and our Company. Other than this there are no other
common pursuits in the business of our Company and our Group Companies. Further, we have entered
into non-compete agreements or understanding with these entities. For further details, of the entities refer
to the chapter titled “Financial Information Of Our Group Companies” beginning on page 149 of the Draft
Red Herring Prospectus.
120
Interest of Promoters
Except as stated in Annexure Xl beginning on page 140 of the Draft Red Herring Prospectus and to
the extent of compensation / sitting fees and reimbursement of expenses in accordance with their
respective terms of employment, our Promoters do not have any other interest in our business.
Our Promoters may also be regarded interested to the extent of dividend payable to them , lease rent of
` 12000 payable annually to Minal Plastic product on the leasehold property taken on leasehold basis
and other distributions in respect of the Equity Shares, if any, held by them or by the companies / firms /
ventures promoted by them or that may be subscribed by or allotted to them and the companies, firms, in
which they are interested as Directors, members, partners and Promoters, pursuant to the Issue. Our
Promoters are also interested to the extent of transactions given under Annexure [Xl beginning on page
140 of the Draft Red Herring Prospectus.
All our Directors, Promoters and Key Managerial Personnel may be deemed to be interested in the
contracts, agreements/arrangements entered into or to be entered into by our Company with any
company in which they hold directorships or any partnership firm in which they are partners as declared in
their respective declarations.
Our Directors and Promoters do not have any interest in any property acquired by our Company in the
period of two (2) years before filing the Draft Red Herring Prospectus with SEBI.
Except as stated otherwise in the Draft Red Herring Prospectus, we have not entered into any contract,
agreements or arrangements during the preceding two years from the date of the Draft Red Herring
Prospectus in which the Directors are directly or indirectly interested and no payments have been made
to them in respect of these contracts, agreements or arrangements and no such payments are proposed
to be made to them.
For further details of the same please refer to heading titled “Properties” beginning on page 96 under
chapter titled “Business overview” and Statement of Related Party Transaction beginning on page 124
of the Draft Red Herring Prospectus.
Payment or benefit to our Promoters during the last two years
No payment has been made or benefit given to our Promoters in the two years preceding the date of the
Draft Red Herring Prospectus or is intended to be given by us except as mentioned/referred to in this
Chapter, and the paragraph titled “Details Of Immovable Property” on page 96 in the Chapters titled
“Business Overview” on page 87 and Related Party Transactions, “Annexure XI” beginning on page 124
under Chapter titled “Auditors’ Report And Financial Information of our Company” of the Draft Red
Herring Prospectus.
Our Promoter Group
Promoter and Promoter Group in terms of Regulation 2(1)(za) and 2(1)(zb) of the SEBI ICDR
Regulations.
Our Promoters are
1.
2.
3.
4.
Jesingbhai Parikh
Shrikant Parikh
Minal Industries Ltd.
C. Mahendra Jewels Pvt. Ltd.
121
Our Promoter Group Consists of:A. Individuals related to our promoter
Relationship with
Mr. Shrikant Jesingbhai
Promoter
Parikh
Father
Jesingbhai Parikh
Mother
Savitaben Parikh
Spouse
Anila Parikh
Son
_
Son’s Wife
_
Duaghter
Brijal Parikh
Arpita Parikh
Hiral Parikh
Badarmal Parikh
Putliben Parikh
Maniben Sadhani
Jagjivan Sadhani
Nayan Parikh
Vikram Parikh
Lataben Mehta
Ami Parikh
Manjula Parikh
Vaghjibhai Mehta
Father’s Father
Father’s Mother
Mother’s Mother
Mother’s Father
Brother
Sister
Brother’s Wife
Sister’s Husband
Mr. Jesingbhai Badarmal Parikh
Badarmal Parikh
Putliben parikh
Savitaben Parikh
Nayan Parikh
Shrikant Parikh
Vikram Parikh
Ami Parikh
Anila Parikh
Manjula Parikh
Lataben Mehta
Ratansi Parikh
Khemiben Parikh
Ambaben Mehta
Khetshibhai Mehta
_
Taraben Doshi
_
Hargovanbhai Doshi
B. Companies related to our Promoter Company
Nature of Relationship
Subsidiary or holding company of such body
corporate.
Any body corporate in which promoter holds 10% or
more of the equity share capital or which holds 10%
or more of the equity share capital of the promoter.
Any body corporate in which a group or individuals
or companies or combinations thereof which hold
20% or more of the equity share capital in that body
corporate also holds 20% or more of the equity
share capital of the issuer
Entity
Minal International FZE
- Mahendra Info jewels Limited
- Aanashika Construction Private Limited
- Aanyora Construction Private Limited
- C. Mahendra Jewels Private Limited
C. Companies, Proprietary concerns, HUF’s related to our promoters
Nature of Relationship
Any Body Corporate in which ten percent or more of
the equity share capital is held by promoter or an
immediate relative of the promoter or a firm or HUF in
which promoter or any one or more of his immediate
relative is a member.
122
Entity
Affinity Investment Private Limited
Click Metro Online private Limited
Minal Exim private Limited
Minal Infrastructure and Property Private
Limited
Minal Lifestyle Private Limited
Minal Infracons private Limited
Anybody corporate in which a body corporate as
provided above holds ten percent or more of the
equity share capital
Any Hindu Undivided Family or firm in which the
aggregate shareholding of the promoter and his
immediate relatives is equal to or more than ten
percent
Partnership firm in which promoter or any of his
relative is having interest.
NIL
NIL
Selection INC.
Minal Plastic Products
RSBL Jewels
JBP Enterprise
Minal Electrical and Engineering
For further details on our Promoter Group refer Chapter titled “Financial Information of our Group
Companies beginning on page 149 of Draft Red Herring Prospectus.
123
RELATED PARTY TRANSACTIONS
For details on related party transactions of our Company, see Annexure Xl Notes to Accounts to the
financial statements respectively, in “Financial Information” beginning from 127 pages.
124
DIVIDEND POLICY
The declaration and payment of dividend will be recommended by the Board of Directors and approved
by the shareholders of our Company at their discretion and will depend on a number of factors, including
the results of operations, earnings, capital requirements and surplus, general financial conditions,
contractual restrictions, applicable Indian legal restrictions and other factors considered relevant by the
Board. Further, pursuant to the terms of the term loans obtained by our Company, prior written consent of
the lenders of our Company is required to pay any dividends. The Board may also from time to time pay
interim dividend. All dividend payments are made in cash to the shareholders of our Company. Under
financing arrangements there are certain restrictions. For Further details see “Financial Indebtedness” on
page 161.
Our Company has not declared any dividend in the last five fiscal years.
125
SECTION VI
AUDITORS’ REPORT AND FINANCIAL INFORMATION OF OUR COMPANY
To
The Board of Directors,
C. MAHENDRA INFOJEWELS LIMITED,
214/A Paradise Complex,
Sayajigunj,
Vadodara - 390005
Dear Sirs,
(i)
We have examined the attached restated financial information of C. MAHENDRA INFOJEWELS
LIMITED (Erstwhile C. Mahendra Infojewels – Partnership Firm) (hereinafter referred to as ‘the
Company’) annexed to this report. The said restated financial information has been prepared by the
Company and approved by the Board of Directors in accordance with the requirements of:
1. paragraph B(1) of Part II of Schedule II of the Companies Act, 1956 (‘the Act’);
2. the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements)
Regulations, 2009 (‘the SEBI Regulations’) issued by the Securities and Exchange Board of
India (‘SEBI’) on 26 August 2009 in exercise of the powers conferred by section 30 of the
Securities and Exchange Board of India Act, 1992 (15 of 1992); and
3. the terms of our engagement agreed upon with you in accordance with our engagement letter
dated 03.10.2011 in connection with the proposed Initial Public Offer of equity shares of the
Company.
(ii)
The restated financial information of the Company has been extracted by the management from the
audited financial statements for the financial year/period ended 31 March 2007, 31 March 2008, 31
March 2009, 31 March 2010, 9 August,2010,31 March 2011, and 30 September 2011 which have
been approved by the Board of Directors.
(iii)
We draw attention to paragraph (ii)(d) in Annexure IV – Accounting Policies and Notes to the
Restated Financial Information regarding no adjustment made in the restated financial information
to remove qualification in auditors’ report with regards to Accounting Standard (AS)-2 “Valuation of
Inventories” for the period / year ended 31 March 2007, 31 March 2008, 31 March 2009 and 31
March 2010, 31 March 2011 and 30 September 2011. The effect of which cannot be determined for
reasons mentioned in paragraph (iii)(2) in Annexure IV.
(iv)
Subject to paragraph 3 above and based on our examination, we further report that:
(A)
The Restated Summary Statement of Assets and Liabilities of the Company as at 31 March 2007,
31 March 2008, 31 March 2009, 31 March 2010, 9 August,2010, 31 March 2011, and 30
September 2011 are as set out in Annexure-I to this report is after making
adjustments/restatements and regrouping as in our opinion were appropriate and more fully
described in paragraph (ii) in Annexure IV – Accounting Policies and Notes to the Restated
Financial Information and
(B)
The Restated Summary Statement of Profit and Loss of the Company for the year/period then
ended 31 March 2007, 31 March 2008, 31 March 2009, 31 March 2010, 9 August,2010, 31 March
2011 and 30 September 2011 are as set out in Annexure-II to this report is after making
adjustments/restatements and regrouping as in our opinion were appropriate and more fully
described in paragraph (ii) in Annexure IV – Accounting Policies and Notes to the Restated
Financial Information.
126
(v)
We have also examined the following restated financial information relating to the Company for the
financial year/period ended 31 March 2007, 31 March 2008, 31 March 2009, 31 March 2010, 9
August,2010, 31 March 2011, and 30 September 2011, annexed to this report:
(a) Statement of Restated Cash Flows as appearing in Annexure-III;
(b) Statement of Restated Sundry Debtors including details of debts due from related parties
as appearing in Annexure-V:
(c) Statement of Restated Loans and Advances as appearing in Annexure-VI;
(d) Statement of Restated Secured Loans as appearing in Annexure-VII;
(e) Statement of Restated Unsecured Loans as appearing in Annexure-VIII;
(f) Statement of Restated Other Income as appearing in Annexure-IX;
(g) Statement of Restated Contingent Liabilities as appearing in Annexure-X;
(h) Statement of Restated Related Party Transactions as appearing in Annexure-XI;
(i) Statement of Restated Segment Information as appearing in Annexure-XII;
(j) Statement of Restated Capitalisation Statement enclosed as Annexure-XIII;
(k) Statement of Restated Accounting Ratios as appearing in Annexure-XIV;
(l) Statement of Tax Shelter appearing in Annexure-XV;
(m) Statement of Dividend paid Annexure XVI and
(vi)
In our opinion the Restated Summary Statement of Assets and Liabilities, Restated Summary of
Profit and Loss Account and the financial information as stated above read along with the
Significant Accounting Policies and Notes as set out in Annexure-IV have been prepared in
accordance with Paragraph B(1) of Part II of Schedule II of the Act and the SEBI Regulations.
(vii)
This report should not be in any way construed as a re-issuance or re-dating of any of the previous
audit reports issued by us or by any other firm of Chartered Accountants, nor should it be construed
as a new opinion on any of the financial statements referred to therein.
(viii) This report is intended solely for use of the management and for inclusion in the Offer Document in
connection with the Proposed Initial Public Offer of the Company and is not be used, referred to or
distributed for any other purpose without our prior consent in writing.
For R. H. Modi & Co.
Chartered Accountants
R. H. Modi
Proprietor
Membership No.37643
(Reg. No. 106486W)
Place : Mumbai
Dated : March 02, 2012
127
ANNEXURE- I
SUMMARY STATEMENT OF ASSETS AND LIABILITIES AS RESTATED:
Particulars
(` in Crores)
As at 31- As at 31Mar-08
Mar-07
As at 30Sep.11
As at 31Mar-11
As at 9Aug 10
As at 31Mar-10
As at 31Mar-09
4.44
4.66
4.63
4.83
5.48
6.25
7.09
4.44
4.66
0.15
4.78
0.08
4.91
5.48
6.25
7.09
-
-
-
-
-
-
-
19.18
256.02
11.95
185.24
24.01
79.98
27.03
75.56
26.88
78.99
42.72
50.54
34.11
68.08
0.41
0.47
0.39
0.21
0.06
0.43
0.35
-
-
-
-
-
-
-
25.13
22.27
1.08
0.75
0.72
0.74
0.62
300.74
219.93
105.46
103.55
106.65
94.43
103.16
10.90
68.37
179.89
2.50
261.66
11.81
70.70
108.15
190.66
11.48
67.62
6.08
0.10
85.28
11.33
28.32
4.23
0.10
43.98
14.73
72.41
5.39
0.10
92.63
22.31
1.59
0.09
23.99
23.40
0.25
3.00
0.07
26.72
V
DEFERRED TAX
LIABILITIES
(NET)
(0.09)
(0.11)
(0.04)
(0.04)
(0.05)
(0.04)
(0.04)
VI
NET WORTH
(I+II+III-IV-V)
43.61
34.04
25.00
64.52
19.55
76.73
83.57
25.00
25.00
25.00
64.52
19.55
76.73
83.58
-
-
-
-
-
-
18.62
9.04
-
-
-
-
I
FIXED ASSETS
NET BLOCK
Capital work-inprogress including
capital advances
II
INVESTMENTS
III
CURRENT
ASSETS, LOANS
AND ADVANCES
Inventories
Sundry debtors
Cash and bank
balances
Other current
assets
Loans and
advances
IV
LIABILITIES AND
PROVISIONS
Secured loans
Unsecured loans
Current liabilities
Provisions
Represented by:
SHAREHOLDERS
FUND
Share Capital
Securities
premium account
Reserve and
Surplus
128
IX
NET WORTH
(VII+VIII)
43.61
34.04
25.00
64.52
19.55
76.73
83.57
ANNEXURE- II
SUMMARY STATEMENT OF PROFIT AND LOSS ACCOUNT AS RESTATED:
(` in crores)
Particular
For the year/ Period end on
31-Mar9-Aug - 31-Mar11
10
10
30-Sep11
INCOME
Income from Manufacturing Items
Income from trading Items
Other income
Increase/ (Decrease) in inventories
EXPENDITURE
Cost of Raw material
Cost of traded Items
Staff cost
Manufacturing expenses
Selling & Distribution expenses
Interest
Miscellaneous expenditure written
off
Depreciation / Amortization
PROFIT BEFORE TAXATION
Provision for tax
Current tax
Less: MAT credit entitlement
Deferred tax
Fringe benefit tax
Net profit after tax
31-Mar09
31-Mar08
31-Mar
-07
18.59
52.19
7.82
78.60
26.62
124.27
150.89
7.38
2.56
1.40
(2.10)
9.24
22.26
3.01
0.05
2.10
27.42
19.25
22.18
14.24
55.67
35.69
77.61
35.69
0.18
77.79
11.11
51.94
1.24
13.18
119.95
2.06
7.13
0.80
9.23
3.07
1.53
36.08
1.51
24.47
2.87
51.68
3.93
1.22
0.06
0.57
5.34
0.10
0.70
0.88
0.04
0.30
9.79
0.01
1.01
1.57
0.17
1.45
7.87
0.38
2.28
7.84
0.48
2.29
0.05
0.30
66.49
0.21
0.38
141.92
0.01
0.21
9.37
0.68
25.32
0.78
41.56
0.90
38.77
1.00
67.22
12.11
8.97
(0.13)
2.10
14.11
(3.08)
10.57
-
-
-
-
-
-
(2.50)
-
-
-
-
-
-
-
-
-
-
(0.13)
(0.01)
(0.01)
2.08
14.11
(0.03)
(3.11)
0.03
(0.03)
10.57
-
-
(0.02)
9.59
0.07
9.04
ANNEXURE- III
STATEMENT OF RESTATED CASH FLOWS:
(` in crores)
Particulars
A
CASH FLOW FROM
OPERATING
ACTIVITIES
Profit before
taxation
Adjustment for:
Depreciation /
As at
30-Sep2011
31-Mar
11
for the year ended
9-Aug
31-Mar- 31-Mar-10
10
09
31-Mar08
31-Mar07
12.11
8.97
(0.13)
2.10
14.11
(3.08)
105.81
0.38
0.21
0.21
0.68
0.78
0.90
10.05
129
Amortization
(Profit) / Loss on
sale of Investments
(net)
Interest income
Interest expenses
Unrealised exchange
difference (net)
Dividend income
Profit /Loss on sale
of fixed assets
Miscellaneous
expenditure written
back
Provision for doubtful
debts and advances
(Net)
Cash generated
from operations
before working
capital changes
Adjustment for:
(Increase)/ Decrease
in inventories
(Increase)/ Decrease
in trade and other
receivables
Increase/ (Decrease)
in current liabilities
and provisions
Cash generated
from/ (used in)
operations
Direct tax paid (Net)
Net cash from/
(used in) Operating
Activities (A)
B.
CASH FLOW FROM
INVESTING
ACTIVITIES
Payments made for
purchase of fixed
assets/ capital
expenditure
Proceeds from sale
of fixed assets
Loans (granted)/
received back (net)
Interest received
(Purchase) / Sale of
Investments
(Proft) / Loss on sale
of Investments (net)
Dividend income
(0.01)
0.70
0.30
-
0.30
(.01)
1.01
1.45
(0.02)
2.28
(1.56)
22.89
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
13.18
9.48
0.38
3.78
16.34
0.08
137.19
(7.23)
12.06
3.02
(0.15)
15.85
(86.15)
92.65
(73.64)
(126.45)
(4.74)
3.40
(28.44)
174.33
8.48
74.24
101.97
1.85
(1.15)
3.79
(13.84)
(55.06)
6.55
(2.50)
(2.94)
-
0.51
-
5.88
-
7.54
-
74.42
(0.25)
183.26
(0.28)
4.05
(2.94)
0.51
5.87
7.54
74.17
182.98
(0.08)
(0.27)
(0.08)
(0.10)
(0.01)
(0.69)
(1.85)
-
-
-
-
-
0.08
-
-
0.01
-
-
-
0.02
1.56
-
-
-
-
-
-
-
-
-
-
-
-
130
C.
Net cash from/
(used in) Investing
Activities (B)
CASH FLOW FROM
FINANCING
ACTIVITIES
Capital
introduced/withdraw
n (net)
Proceeds from issue
of shares (Refer note
2 below)
Proceeds from
borrowings (net of
repayment)
Interest paid
Net cash from/
(used in) Financing
Activities (C)
Net increase/
(decrease) in Cash
and Cash
Equivalents
(A+B+C)
Cash and Cash
Equivalents at the
beginning of the
year/period
Cash and Cash
Equivalents at the
end of the
year/period
Components of
Cash and Cash
Equivalents at the
end of the
year/period
Cash in hand
Balance with
scheduled banks
Current account
EEFC account
Add: Effect of
exchange difference
(closing)
Fixed deposit/
margin money
(0.08)
(0.26)
(0.08)
(0.10)
(0.01)
(0.59)
(0.29)
-
-
(39.41)
42.88
(71.27)
(37.47)
(6.59)
-
-
-
-
-
-
(3.24)
(0.57)
3.42
(0.70)
39.44
(0.30)
(47.49)
(1.01)
64.82
(1.45)
(13.35)
(22.81)
(188.26)
(22.89)
(3.81)
2.72
(0.27)
(5.62)
(7.90)
(73.63)
(217.74)
0.16
(0.48)
0.16
0.15
(0.37)
(0.05)
(35.05)
0.47
0.39
0.21
0.06
0.43
3.53
38.57
0.63
(0.09)
0.37
0.21
0.06
3.48
3.52
0.36
0.40
0.37
0.20
0.05
2.11
3.41
0.05
-
0.07
-
-
0.01
-
0.01
-
2.20
-
0.11
-
-
7.28
-
-
-
-
0.41
0.47
0.21
0.06
4.31
3.52
0.02
0.39
The accompanying Significant Accounting Policy and Notes to the Restated Financial Information are an
integral part of this Statement of Restated Cash Flow.
131
ANNEXURE – IV
ACCOUNTING POLICIES AND NOTES TO THE RESTATED FINANCIAL INFORMATION
1) SIGNIFICANT ACCOUNTING POLICIES:
i)
Basis of Preparation
These Restated Financial Information of C. Mahendra Infojewels Limited have been extracted from the
audited financial statements for the respective year/period and restated to comply in all material
respects with the Accounting Standards prescribed by the Companies Accounting Standards Rules, 2006
notified by the Central Government to the extent possible except as disclosed in paragraph ii(d) here in
below and other adjustments as necessary in accordance with paragraph B(1) of Schedule II of The
Companies Act, 1956 and SEBI Regulations.
ii)
Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles
requires management to make estimates and assumptions that affect the reported amounts of assets
and liabilities and disclosure of contingent liabilities at the date of the financial statements and the
results of operations during the reporting period end. Although these estimates are based upon
management’s best knowledge of current events and actions, actual results could differ from these
estimates.
iii)
Fixed Assets
Fixed assets are accounted at cost of acquisition inclusive of freight, duties, taxes, incidental expenses
and borrowing cost and are stated at written down value.
iv)
Depreciation
The Company has been charging depreciation on written down value method at the rates and in the
manner specified in Schedule XIV to the Companies Act, 1956.
Leasehold land is amortised over the lease period.
v)
Investments
Investments intended to be held for more than one year are classified as long-term investments and
other investments are classified as current investments. Long-term investments are valued at cost less
provision, if any, for diminution in value, which is other than temporary. Current investments are valued
at the lower of cost or market value on scrip wise basis.
vi)
Inventories
1. Raw materials – are valued at lower of cost or net realisable value. The cost is based on
technical estimates by the management.
2. Traded goods - are valued at lower of cost or net realisable value.
3. Consumables are valued at lower of estimated cost or net realisable value.
vii)
Revenue Recognition
132
Revenue from exports sales is recognised when delivery of goods is physically given to customs
authorities. Revenue from domestic sales is recognised when the title of goods passes to the customers,
which is generally on delivery.
viii)
Foreign Currency Transactions
a)
In respect of export of goods and services, the transactions in foreign currency are
recorded in rupees by applying to the foreign currency amount, the exchange rate
prevailing on the date of the transaction. Any excess or shortfall at the time of actual
realization is charged to the profit and loss account.
b)
In respect of import of goods and services, the transactions in foreign currency are recorded in
rupees by applying to the foreign currency amount, the exchange rate prevailing on the date of the
transaction. Any excess or shortfall at the time of ctual payment is charged to the profit and loss account.
c)
In respect of import of capital goods, the transaction in foreign currency is recorded in rupees
by applying to the foreign currency amount the exchange rate prevailing on the date of
transaction. Exchange differences in respect of liabilities incurred and settled within the financial year to
acquire fixed assets are charged to the profit and loss account.
d)
Assets and liabilities related to foreign currency transactions other than fixed assets remaining
unsettled at the year end are translated at the contract rate, when covered by a foreign exchange contract
and at year end rates in other cases. The gains and losses arising on foreign exchange transactions other
than those relating to fixed assets are recognized in profit and loss account. Gains and losses arising on
foreign exchange transactions relating to fixed assets are charged to the profit and loss account.
ix)
x)
Retirement Benefits
1.
Retirement benefits in the form of provident fund and pension scheme are accounted on
accrual basis.
2.
Provision for gratuity liability is made on the basis of actuarial valuation at the end of the
accounting year.
Borrowing Costs
Borrowing cost directly attributable to acquisition or construction of fixed assets, which necessarily take
substantial period of time to get ready for their intended use, are capitalised. Other borrowing costs are
charged to profit and loss account.
xi)
Taxation
Tax expense comprises of current, deferred and fringe benefit tax. Current income tax and fringe
benefit tax are measured at the amount expected to be paid to the tax authorities in accordance with
the Indian Income Tax Act. Deferred income taxes reflects the impact of current period timing
differences between taxable income and accounting income for the year and reversal of timing
differences of earlier years.
Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at
the balance sheet date. Deferred tax assets are recognised only to the extent that there is reasonable/
virtual certainty that sufficient future taxable income will be available against which such deferred tax
assets can be realised.
At each balance sheet date the Company re-assesses unrecognised deferred tax assets. It recognises
unrecognised deferred tax assets to the extent that it has become reasonably/ virtually certain that
133
sufficient future taxable income will be available against which such deferred tax assets can be
realised.
xii)
Accounting for Provisions and Contingent Liabilities
A provision is made when there is a present obligation as a result of a past event that probably requires
an outflow of resources and a reliable estimate can be made of the amount of the obligation. Provisions
are not discounted to its present value and are determined based on best estimate required to settle
the obligation at the balance sheet date. A disclosure for a contingent liability is made when there is a
possible obligation or a present obligation that may, but probably will not, require an outflow of
resources.
xiii)
Earning Per Share
The Basic Earning per Share (EPS) is computed by dividing the Net Profit after tax for the period
available for the Equity Shareholders by the weighted average number of Equity Shares outstanding
during the period. For the purpose of calculating diluted Earnings per Share, Net Profit after tax for the
period available for Equity Shareholders and the weighted average number of shares outstanding
during the period are adjusted for the effects of all dilutive potential Equity Shares.
xiv)
Impairment
At each balance sheet date, the Company determines whether a provision should be made for
impairment loss on fixed assets (including intangible assets), by considering the indications that an
impairment loss may have occurred in accordance with Accounting Standard (AS)-28 ‘Impairment of
Assets’. Where the recoverable amount of any fixed assets is lower than its carrying amount, a
provision for impairment loss on fixed assets is made.
xv)
Preliminary Expenses
Preliminary expenses are charged to the profit and loss account in the year in which the same are
incurred.
x
Adjustments resulting from changes in accounting policies
i)
Gratuity
During the year ended 31 March 2007, the Company adopted the Accounting Standard (AS)-15
“Employee Benefits” applicable for accounting periods commencing on or after December 7,
2006.Accordingly, Employees’ Remuneration and Benefits have been recomputed for the year/period
ended 31 March 2007, 31 March 2008, 31 March 2009, 31 March 2010, 9 August 2010, 31 March 2011
and 31 September 2011 in the Restated Financial Information. Further the accumulated profit and loss
balance as at 1 April 2006 has been appropriately adjusted to reflect the impact of the change
pertaining to periods ended on or before 31 March 2006.
ii)
Depreciation
Till 09 August 2010, while the Company was a partnership firm, depreciation was charged at the rates
and in the manner specified in the Income Tax Act, 1961. After conversion in to a company under Part
IX of The Companies Act, 1956 w.e.f. 10 August 2010, the Company has charged depreciation at the
rates and in the manner prescribed in Schedule XIV to the Companies Act, 1956.
Adjustment on this account has not been carried out prior to financial year ended 31 March 2006 and
written down value as on 01 April 2006 has been considered for depreciation calculation for the
financial year ended 31 March 2007 and onwards. Accordingly, adjustment has been carried out for the
purpose of this Restated Financial Information.
134
iii)
Profit / (loss) on sale of fixed assets
Till 09 August 2011, while the Company was a partnership firm, profit /(loss) on sale of fixed assets was
not determined and amount realized for sale of fixed assets was reduced from block of fixed assets in
accordance with provisions under Income Tax. After conversion into a company under Part IX of The
Companies Act, 1956 w.e.f 10 August 2011, profit / (loss) on sale of fixed assets is accounted
separately in Profit and Loss Account. Accordingly, adjustment has been carried out for the earlier
year/period.
iv)
Deferred tax expenses
Deferred tax was not accounted upto the financial period ended 09 August 2010 in the books of the
partnership firm. Accordingly, adjustment has been carried out for the earlier year/period.
x
Material adjustments relating to previous year/period
i)
Tax adjustments of earlier years
The Company records tax adjustments of earlier years on completion of assessments made by the
Income tax authorities and any difference is recorded as ‘prior year tax adjustments’ in the financial
statements. Accordingly, the effect of these items has been adjusted in the period to which the tax was
related in the Restated Summary Statement of Profits and Loss Account.
x
Material regroupings
i.
x
Upto 31 March 2009, exchange rate differences arising on transactions relating to imports
and year end restatement of creditors in foreign currency was included under in
‘Purchases’. Similarly exchange rate differences on transactions relating to export sales
and year end restatement of debtors in foreign currency was included in ‘Sales’. During the
year/period ended 31 March 2010, 09 August 2010, 31 March 2011 and 30 September
2011, exchange rate difference arising on transactions in foreign currency has been
disclosed separately as ‘Exchange rate difference (net)’ grouped under ‘Other Income’ or
‘Manufacturing and Other Expenses’ as the case may be. Accordingly, the figures of
previous year/period have been regrouped/ rearranged.
Non-Adjustments of Auditors’ Qualifications
No adjustment has been made in the Restated Summary Statement of Assets and Liabilities and
Restated Summary Statement of Profit and Loss Account, to remove qualification in auditors’ report for
the financial year/period ended 31 March 2007, 31 March 2008, 31 March 2009, 31 March 2010, 09
August 2010, 31 March 2011 and 30 September 2011 change in accounting policy required in those
year/period to comply with the Accounting Standard (AS)-2 “Valuation of Inventories”.
i.
i)
NOTES TO RESTATED FINANCIAL INFORMATION
Contingent liabilities:
Contingent liabilities is shown separately in Annexure ‘XI’
ii)
Valuation of inventories
In respect of stock of Raw materials, (ie diamond, precious stones and semi precious stones) cost is
based on technical estimates by the management. In view of nature of variation in value of individual
diamonds and precious stones, the differentials in their cost, it is not practical to compute the cost using
either FIFO or Weighted average cost. In view of multiple grades, it is not practical to use specific cost.
135
The basis of computing cost used on consistent basis, to avoid distortion in valuation, is to that extent a
deviation from that prescribed by Accounting Standard (AS)-2 ‘Valuation of Inventories’.
The impact on profit for the year/period ended 31 March 2007, 31 March 2008, 31 March 2009, 31
March 2010, 09 August 2010, 31 March 2011 and 30 September 2011, inventories and reserves and
surplus as at 31 March 2007, 31 March 2008, 31 March 2009, 31 March 2010, 09 August 2010, 31
March 2011 and 30 September 2011 due to the above deviations is not ascertainable.
iii)
During the year / period ended 31 March, 2011 the company has incurred expenses
amounting to ` 6,34,021/- towards proposed IPO which are included under Profit and Loss
account under the head Professional and Consultancy.
iv)
The management based on their review of assets and operation of the Company has
determined that there is no indication of potential impairment and that the recoverable
amount of any of its fixed assets is not lower than its carrying amount.
v)
Related party disclosure
The related party relationships have been determined on the basis of the requirements of the
Accounting Standard (AS)-18 ‘Related Party Disclosures’ and the same have been relied upon by the
auditors.
Name of the related party disclosed are those related parties with whom transactions have taken place
during the period, except where control exist, in which case the relationships have been mentioned
irrespective of transactions with the related party.
Details of related party transactions are given in Annexure XI.
vi) Segment information
The Company has only one business segment viz. Gems and Jewellery, which is being considered as
the primary segment. The financial information about business segment is not applicable since
segment results / revenue / assets of the wind mill business are not more than 10 percent of the
combined business results / revenue / assets. The information regarding the secondary segment, i.e.
‘geographical segments’ is given separately in Annexure XII.
vii)
The remuneration paid/payable to directors for the year/period ended 31 March 2011 and 30
September 2011 is ` 8, and ` 6 respectively.
The Company has not received any information from its suppliers regarding their registration under the
‘Micro, Small and Medium Enterprises Development Act, 2006’. Hence interest if any payable as
required under Act has not been provided and the information required to be given in accordance with
Section 22 of the said Act, is not ascertainable and hence, not disclosed.
ANNEXURE - IV A
STATEMENT OF ADJUSTMENTS / RESTATEMENT AND REGROUPING
Sl.
No.
Particulars
Period
ended
30Sep-11
A.
Profit after tax as per
audited financial
statements
9.58
Period
ended
31Mar-11
Period
ended
9Aug10
Period
ended
31Mar10
31Mar-09
8.96
(0.10)
2.10
14.10
Adjustment for:
136
Year
ended
(` In crores)
Year
Year
ended ended
3131MarMar08
07
(3.06)
106.18
i) Change in accounting
policies and restatement
Dividend income
-
-
-
-
-
-
-
(0.01)
(0.02)
(0.01)
0.01
-
(0.03)
(0.03)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(0.01)
-
-
(0.01)
(0.01)
-
(0.01)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(0.01)
0.01
(0.01)
(0.03)
(0.02)
(0.02)
(0.01)
(0.01)
-
(0.04)
(0.07)
-
0.08
-
-
-
-
-
0.01
0.01
-
(0.01)
-
-
0.03
(0.01)
0.07
(0.01)
(0.02)
-
(0.04)
(0.04)
9.57
9.03
(0.11)
2.08
14.10
(3.10)
106.14
Gratuity
Bonus
Profit / (loss) on sale of
fixed assets
Depreciation
Preliminary expenses
Current tax expenses
MAT credit entitlement
Fringe benefit tax expenses
Tax impact on above
adjustments:
Current tax expenses
Deferred tax expenses
B.
Adjustments net of tax
impact
C
Adjusted profit (A+B)
ANNEXURE - V
STATEMENT OF SUNDRY DEBTORS:
(` In crores)
Particulars
(Unsecured, considered
good unless otherwise
stated)
(A) Debt outstanding for
a period exceeding six
months & others
(B) Debts from Others
TOTAL
Includes Receivable from
Subsidiaries
As at
09Aug-10
As at
31Mar10
As at
31Mar-09
As at
31-Mar08
As at 31Mar-07
As at
30-Sep11
As at
31-Mar11
128.96
127.06
58.19
127.05
62.50
17.48
61.20
14.36
71.37
7.62
43.18
7.36
44.38
23.70
256.02
185.24
79.98
75.56
78.99
50.54
68.08
-
-
-
-
-
-
-
137
Received from other
Related Parties
1.C.MahindraExports(HK)
2.Minal Engg. Ltd
3.Selection Inc.
Total
0.01
47.48
47.49
0.01
50.35
50.36
0.01
0.39
62.50
62.90
0.01
0.38
61.20
61.59
0.01
0.43
71.37
71.81
0.01
0.01
43.18
43.20
0.01
67.35
67.36
ANNEXURE - VI
STATEMENT OF LOANS AND ADVANCES:
(` In crores)
Particulars
(Unsecured and considered
good, unless otherwise stated)
Loans and advances
Loans and advances to
subsidiaries:
Loans to staffs/ Others
Advances recoverable in cash or
in kind or for value to be received
Deposits with Government, Public
Bodies, etc.
Taxes paid (Advance tax and TDS
receivable)
Fringe benefit tax paid
Total
As at
As at
30-Sep11
31-Mar11
0.19
0.17
24.91
As at
09Aug10
As at
As at
As at
As at
31Mar-10
31Mar-09
31Mar08
31-Mar07
0.24
0.16
0.15
0.19
0.20
22.06
0.72
0.47
0.42
0.34
0.23
0.07
0.08
0.06
0.06
0.05
0.08
0.08
(0.04)
25.13
(0.04)
22.27
(0.04)
0.10
1.08
(0.04)
0.10
0.75
0.10
0.72
0.04
0.09
0.74
0.04
0.07
0.62
ANNEXURE - VII
STATEMENT OF RESTATED SECURED LOANS:
(` In Crores)
Particulars
Short term working capital loans
from banks
Interest accrued and due on the
above
As at
30Sep11
10.90
As at
31Mar11
11.81
As at
9
Aug10
As at
31Mar10
11.31
11.33
As at
31Mar09
14.28
As at
As at
31-Mar08
31-Mar-07
18.56
18.64
-
-
-
-
-
-
-
Short term loans from bank
-
-
0.16
-
0.45
3.75
4.76
Long term loans from banks
Interest accrued and due on the
above
-
-
-
-
-
-
-
-
-
-
-
-
-
-
10.90
11.81
11.47
11.33
14.73
22.31
23.40
Total
NOTES:
1. Working capital loans are secured against hypothecation of stocks, receivables, collateral
securities of fixed assets and factory premises and personal guarantee of directors.
138
2. Gold loans are secured against hypothecation of stocks, collateral securities of property and
personal guarantee of partners / directors
ANNEXURE-VIII
STATEMENT OF RESTATED UNSECURED LOANS
Particulars
From Directors*
From
Shareholders
/Partners*
From Others
Total
As at
30-Sep11
26.19
As at
31-Mar11
26.34
As at
09-Aug10
-
22.21
20.04
68.44
23.62
20.82
70.78
39.30
28.32
67.62
As at
31-Mar10
-
As at
31-Mar09
-
28.32
28.32
72.41
72.41
(` In crores)
As at
As at
31-Mar31-Mar08
07
-
0.25
0.25
* The loans are interest free.
The above loans have no fixed repayment schedule.
ANNEXURE –IX
STATEMENT OF RESTATED OTHER INCOME
PARTICULARS
Interest on electricity
deposit
Exchange Difference
Interest on It Refund
Interest on fixed
deposits with banks
Interest on TDS
Rebate and discount
Sale of scrap
Miscellaneous income
Total
As at
30-Sep11
As
at
31-Mar11
7.82
-
-
7.82
-
As at 9
Aug-10
(` In Crores)
As at
31Mar - As at 3108
Mar -07
As at
31- Mar
-10
As at 31Mar -09
1.40
-
-
14.10
-
-
-
1.40
0.05
0.05
0.14
14.24
-
0.16
0.02
0.18
ANNEXURE – X
STATEMENT OF RESTATED CONTINGENT LIABILITIES
(` In Crores)
Particulars
Bond cum Undertaking
given by the Company to
the President of India
towards manufactue of
goods for Exports in
Special Economic Zone
Total
As at
30-Sep11
147.74
As at 31Mar-11
147.74
147.74
147.74
As at 9Aug-10
-
139
As at
31-Mar10
-
As at 31Mar-09
-
As at
31-Mar08
-
As at 31Mar-07
-
--
-
-
-
ANNEXURE - XI
STATEMENT OF RESTATED RELATED PARTIES TRANSACTIONS
(` In crores)
Nature of
Transaction
s
Sale
of
Diamond
Studded
Jewellery
Name
Party
Selection
INC
Minal
Industries
Ltd.
Total
Sale of Cut
& Polished
Diamond
Selection
INC
Total
Purchase of
Gold
and
Gold
Finding
Purchases
of polished
diamonds
Selection
INC
Total
C.
Mahendra
Exports
C
Mahendra
Internation
al Ltd.
Nature of
Relationshi
p
Enterprises
in
which
relatives of
key
management
have
significant
influence
Enterprises
in which key
management
have
significant
influence
Enterprises
in
which
relatives of
key
management
have
significant
influence
Enterprises
in
which
relatives of
key
management
have
significant
influence
Enterprises
in which key
management
have
significant
influence
(Till
31.12.08)
Enterprises
in which key
management
have
As at
30Sep11
As at
31Mar11
4.56
5.05
-
As
at 9Aug
-10
As at
31Mar10
As at
As at
As at
31-Mar09
31-Mar-08
31-Mar-07
4.22
7.56
7.90
22.40
49.67
-
-
-
0.35
0.01
-
4.56
5.05
4.22
7.56
8.25
22.41
49.67
-
2.39
-
3.01
22.18
-
-
6.43
2.39
7.99
1.35
3.01
3.56
22.18
4.29
8.03
1.88
6.43
7.99
1.35
3.56
4.29
8.03
1.88
-
-
-
-
-
.12
-
-
-
-
-
-
140
C.
Mahendra
Exports
(HK) Ltd
Selection
INC
Total
significant
influence
Enterprises
in which key
management
have
significant
influence
(Till
31.12.08)
Enterprises
in
which
relatives of
key
management
have
significant
influence
5.48
7.16
-
-
-
3.93
0.32
4.22
12.02
0.32
4.22
12.02
-
4.05
5.48
7.16
Minal
Industries
Ltd.
-
-
-
-
-
-
Selection
INC
Enterprises
in
which
relatives of
key
management
have
significant
influence
-
-
-
-
-
-
-
-
0.02
0.02
0.15
0.15
-
-
-
-
-
0.01
0.08
0.11
0.12
-
Total
Minal
Industries
Ltd.
Selection
INC
Enterprises
in which key
management
have
significant
influence
Enterprises
in
which
relatives of
key
management
have
significant
influence
Total
Purchase of
Silver
and
Silver
Findings
-
Enterprises
in which key
management
have
significant
influence
Purchases
of
Colour
Stone
Purchases
of
Consumable
s
-
Selection
Inc
Enterprises
in
which
relative
of
key
management
0.03
0.02
141
-
0.02
0.67
personnel
have
significant
influence
0.03
Total
Selection
Inc
Purchase of
Platinum
Enterprises
in
which
relative
of
key
management
personnel
have
significant
influence
0.02
Total
Reimburse
ment
of
expenses
incurred
C.
Mahendra
Export Ltd
Enterprises
in which key
management
have
significant
influence
(Till
31.12.08)
Total
Director
Remunerati
on
Shrikant
Parikh
Partner (Till
09.08.10)
/
Director
Total
Purchase of
Diamond
Studded
Jewellery
Selection
INC
Enterprises
in
which
relatives of
key
management
have
significant
influence
Total
Loans taken
C
Mahendra
Jewels Pvt
Ltd
Shrikant
Parikh
JESINGB
HAI
B
PAREKH
0.02
Enterprises
in which key
management
have
significant
influence
(Till
31.12.08)
Partner (Till
09.08.10)
/
Director
Partner (Till
09.08.10)
/
Director
0.02
-
-
-
0.02
-
-
0.67
-
-
0.08
-
-
-
-
-
-
-
-
-
3.22
2.65
-
-
-
--
-
3.22
2.65
-
-
-
-
-
0.03
0.03
0.03
0.03
-
-
17.35
-
0.02
0.02
0.02
25.10
2.91
2.91
-
-
28.20
-
-
-
-
-
--
-
-
-
-
2.67
-
142
-
Minal
Industries
Ltd.
Enterprises
in which key
management
personnel
have
significant
influence
Total
Loans
Repaid
54.75
-
-
0.02
-
-
0.25
-
25.10
Jignesh M
Shah
Relative
of
key
management
personnel
(Till
31.12.08)
-
-
-
25.10
0.01
-
-
C
Mahendra
Jewels Pvt
Ltd
Enterprises
in which key
management
personnel
have
significant
influence
Partner (Till
09.08.10)
/
Director
Enterprises
in which key
management
personnel
have
significant
influence
-
1.89
-
-
-
-
-
-
0.26
-
-
-
-
-
-
2.15
-
25.10
0.01
0.25
-
Shrikant
Parikh
Minal
Industries
Ltd.
Total
Loans Given
6.53
-
Minal
Infracons
Pvt Ltd
Associate
Co (W.e.f.
10.08.2010)
-
-
-
-
-
-
-
Minal
Lifestyles
Pvt Ltd
Associate
Co (W.e.f.
10.08.2010)
-
-
-
-
-
-
-
Minal
Infrastruct
ure &
Properties
Pvt Ltd
Minal
Exim Ltd
Associate
Co (W.e.f.
10.08.2010)
-
-
-
-
-
-
-
-
-
-
-
-
-
Enterprises
in which key
management
personnel
have
significant
0.03
143
influence
0.03
Total
-
-
-
-
-
-
Note: Minal Industries Ltd. was formerly Minal Engineering Ltd
ANNEXURE – XII
STATEMENT OF RESTATED SEGMENT INFORMATION
30-Sep11
31-Mar-11
9-Aug-10
31-Mar10
31-Mar09
(` In crores)
31-Mar31-Mar08
07
Segment Revenue
Outside India
70.78
150.90
9.94
25.27
41.07
35.69
77.61
Within India
Total
70.78
150.90
9.94
-
0.36
-
-
25.27
41.43
35.69
77.61
Segment Assets
Outside India
Within India
Total
258.00
187.05
77.12
75.19
78.58
50.55
68.10
47.18
37.54
33.12
33.27
33.55
50.13
42.15
305.18
224.59
110.24
108.46
112.13
100.68
110.25
0.08
-
0.27
-
0.01
-
0.03
-
0.01
-
0.07
-
0.19
-
0.08
0.27
0.01
0.03
0.01
0.07
0.19
Additions to fixed
assets
Within India
Outside India
Total
ANNEXURE XIII
STATEMENT OF RESTATED CAPITALISATION STATEMENT:
(` In crores)
Particulars
Debts
Short term debts
Long term debts
Total Debts
Shareholders' Fund
Share capital
Reserves and surplus
Total Shareholders Funds
Total Debts/Shareholders Funds (Ratio)
Pre Issue as
at
30.09.2011
Post issue
79.36
79.36
-
[]
[]
[]
25.00
18.62
43.62
1.82
-
[]
[]
[]
[]
Post issue
Notes:
1. The above ratio has been calculated on the basis of restated financial information of the Company.
144
2. The post-issue capitalisation statement cannot be calculated at this stage.
ANNEXURE -XIV
STATEMENT OF ACCOUNTING RATIOS:
30-Sep-11
31-Mar-11
Particulars
Earning per
Share (EPS)
(`) (Basic &
Diluted)
3.83
3.62
Net
Asset
Value (NAV)
(` per share)
17.45
13.62
Return
on
Net
Worth
(RONW) (%)
21.95
26.56
Weighted
average No.
25,000,00 25,000,00
of
Equity
0
0
Shares
outstanding
during
the
year/period(
Including
Bonus issue
of shares )
No. of Equity
Shares
25,000,00 25,000,00
outstanding
0
0
at the end of
the
year/period(
Including
Bonus issue
of shares )
# It was partnership Firm earlier.
9-Aug-10
31-Mar-10
31-Mar-09
(` In crores)
31-Mar-08
31-Mar-07
(0.05)
0.84
5.64
(1.24)
4.23
9.98
25.81
7.82
30.69
33.43
(0.47)
3.25
72.11
(4.05)
12.66
25,000,000
25,000,000
25,000,000
25,000,000
25,000,000
25,000,000
25,000,000
25,000,000
25,000,000
25,000,000
Notes:
1. The Ratios has been computed as below:
Earning Per Share (`)
=
__________________Net Profit After Tax__________________
Weighted Average Number of Equity Shares outstanding during the year/period
__________________Net Profit After Tax__________________
Diluted Earning Per Share (`) =
Weighted Average Diluted Number of Equity Shares
__________Net Worth Excluding Revaluation Reserve _______
Net Asset Value Per Share (`) =
Number of Equity Shares outstanding as at the year/period end
Return on Net Worth (%)
=
________________Net Profit After Tax X 100______________
Net Worth Excluding Revaluation Reserve
145
2.The above ratios have been computed on the basis of the Restated Financial Information for the
respective year/period.
1. The status of the Company prior to 10 August 2010 was that of a partnership firm. Hence, EPS
and NAV per share have been computed for all the periods/ years prior to 31 March 2011 by
considering the number of shares outstanding as at 10 August 2010.
2. Net worth as at 9 August 2010 has been taken but including amount transferred from partner's
capital account to unsecured loan account as on 9 August 2010 (net of impact on restatement).
3. Earnings per Share is computed in accordance with Accounting Standard (AS) 20 “Earnings Per
Share” issued by the Institute of Chartered Accountants of India. EPS and RONW for the period
ended 09 August 2010 and 31 March 2011 and 30 September 2011 are not annualised.
ANNEXURE XV
STATEMENT OF TAX SHELTERS
Particulars
Profit before
tax as per
restated
profit and
loss account
Tax rate
(including
surcharge
and
education
cess)
Notional tax
as per tax
rate on
profits (A)
Tax
Adjustments
Permanent
Difference
Donation
Deduction
u/s. 10A
Deduction
u/s. 10AA
Disallowance
u/s. 40A(3)
Dividend
income
Total
Timing
Difference
Loss /
(Profit) on
sale of fixed
asset
Disallowance
u/s. 40a(ia)
30-Sep-11
31-Mar11
9-Aug-10
31-Mar-10
31-Mar09
31-Mar-08
(` In Crores)
31-Mar-07
12.09
8.96
(0.13)
2.12
14.10
(3.09)
10.58
30.9000%
30.9000%
30.9000%
30.9000%
30.9000%
30.9000%
33.66%
3.74
2.77
(0.04)
0.66
4.36
(0.95)
3.56
-
-
-
-
-
-
-
-
-
0.10
(2.11)
(14.11)
2.99
(10.59)
(9.35)
-
-
-
-
-
-
-
-
(9.35)
0.10
(2.11)
(14.11)
2.99
(10.59)
(0.01)
-
-
-
-
-
-
-
-
-
-
-
-
-
146
Depreciation
Preliminary
expenses
Disallowance
u/s. 43B Bonus
payables
Disallowance
u/s. 43B Profession
Tax
Disallowance
u/s. 40A(7) Provision for
gratuity
Total Timing
Difference
(C)
Total
Adjustments
(D) = (B+C)
Tax
Expenses /
(savings)
thereon (E
)=(D)*Tax
rate
Tax payable
as per
normal
provisions
(other than
115JB )of the
Act (F)
MAT tax rate
(G)
Tax under
MAT (H)
Tax payable
for the year
maximum of
(F) or (H)
Interest
under section
234B & 234C
(As per
income tax
return)
Total Tax
payable
0.01
0.01
-
0.01
0.01
-
-
0.02
0.17
-
-
-
-
-
-
-
-
-
-
0.06
(0.03)
-
0.01
0.15
0.01
(0.01)
-
0.03
0.03
0.03
0.33
0.01
-
0.01
0.09
-
0 .03
(9.02)
0.11
(2.11)
(14.10)
3.08
(10.59)
0 .01
(2.79)
0.03
(0.65)
(4.36)
0.95
(3.56)
2.22
(0.01)
-
(0.01)
-
-
-
20.96
11.22%
11.22%
-
-
-
-
2.50
-
-
-
-
-
-
2.5
-
-
-
-
-
-
-
-
-
-
-
-
-
2.5
-
-
-
-
-
-
147
ANNEXURE
STATEMENT OF DIVIDEND PAID/ PAYABLE
(` In Crores)
Particulars
Dividend
proposed/paid
As at
30-Sep11
Nil
As at
31-Mar11
AS at
09/Aug/2010
Nil
Nil
148
As at
31-Mar10
Nil
As at
31-Mar09
Nil
As at
31-Mar08
Nil
As at
31-Mar07
Nil
FINANCIAL INFORMATION OF OUR GROUP COMPANIES
A. Listed companies
1. Minal Industries Limited (MIL)
B. Unlisted Companies
1.
2.
3.
4.
5.
6.
7.
Affinity Investment Private Limited (AIPL)
ClicksMetro Online Private Limited (CMOPL)
C Mahendra Jewels Private Limited(CMJPL)
Minal Exim Private Limited (MEPL)
Minal Infracons Private Limited (MIPL)
Minal Infrastructure And Property Private Limited(MIPPL)
Minal life Style Private Limited(MLSPL)
C. Partnership Firm
1.
2.
3.
4.
RSBL
Minal Plastic Products (MPP)
Minal Electrical & Engineering (MEE)
JBP Enterprise
As per schedule Vlll (IX)(C) (2) of SEBI (ICDR) Regulation, 2009 we have given financial information for
total five largest companies listed and unlisted based on turnover.
LISTED COMPANIES
1. Minal Industries Limited
Date of Incorporation
CIN
PAN
Type of Business
January 11,1988
L32201MH1988PLC216905
AABCM3102D
Dealer in Engineering Tools and to deal in
bullion, gold, platinium, silver, and metals of
every discription and object.
History of the Company
Minal Industries Limited was originally incorporated with the Name Minal Electro Tools Private Limited on
January 11, 1988 with registrar of the company Dadra & Nagar Haveli Gujarat. Pursuant to name change
from Minal Electro Tools Private Limited to Minal Electro Tools Limited the fresh incorporation certificate
received by company on September 30th, 1993. Fresh certificate of incorporation received consequent
upon name change from Minal Electro Tools Limited to Minal Engineering Limited dated October 29th,
1993. Fresh certificate of incorporation consequent of name change from Minal Engineering Limited to
Minal industries limited received dated March 23, 2010. The register office of the company at 603, a Wing, Minal Complex Opp. Saki Vihar Road, Andheri (East) Mumbai Maharashtra
SHAREHOLDING PATTERN OF THE COMPANY as on December 31, 2011.
149
Catg.
code
(I)
(A)
(1)
(a)
(B)
(a)
(b)
(c)
(C)
(1)
Category of
shareholder
(II)
Shareholding of
Promoter and
Promoter Group
Indian
Individuals/ Hindu
Undivided Family
Sub-Total (A)
Total Shareholding of
Promoter and
Promoter Group (A)
Public shareholding
Non-institutions
Bodies Corporate
Individuals i. Individual
shareholders holding
nominal share capital
up to ` 1 lakh.
ii. Individual
shareholders holding
nominal share capital in
excess of ` 1 lakh.
Any Other (specify)
(a) N.R.I. (Repat &
Non-Repat.)
(b) Foriegn Corporate
Bodies
(c) Trust
(d) Hindu Undivided
Family
(f) Employee
(h) Clearing Members
Total Public
Shareholding (B)
TOTAL (A)+(B)
Shares held by
Custodians and
against which
Depository Receipts
have been issued
Promoter and Promoter
Numb
er of
share
holde
rs
(III)
Total
number
of shares
Number
of shares
held in
demateria
lized form
Total shareholding
as a percentage of
total number of
shares
As a
percenta
ge of
(A+B)
(VI)
As a
percenta
ge of
(A+B+C)
Nu
mb
er
of
sha
res
(VIII
)
As a
perc
enta
ge
(IV)
(V)
4
4
36518205
36518205
36518205
36518205
50.79%
50.79%
50.79%
50.79%
Nil
Nil
Nil
Nil
4
36518205
36518205
50.79%
50.79%
Nil
Nil
112
21836504
3019834
30.37%
30.37%
1749
5696836
5404756
7.92%
7.92%
40
6948260
5856260
9.66%
9.66%
49
165728
165728
0.23%
0.23%
1
3330
3330
80
731787
731787
1.02%
1.02%
2031
2035
35382445
71900650
15181695
51699900
49.21%
100.00%
49.21%
100.00%
150
(VII)
Shares
Pledged or
otherwise
encumbere
d
(IX)=
(VIII)
/(IV)*
100
(2)
Group
Public
GRAND TOTAL
(A)+(B)+(C)
2035
71900650
51699900
100.00%
100.00%
Details of Listing of Minal Industries Limited:
Year of Initial Listing
Name of the Stock Exchanges Where Currently
Listed
Details of Public/Right issues in the preceding three
years
Date of Allotment
Date of Listing
Listing Code
1994
Mumbai, Ahmedabad and Vadodara Stock
exchange
Nil
Nil
Nil
522235
The Stock Market Date of Minal Industries Limited:
Month
High
Low
September 2011
October 2011
November 2011
December 2011
January 2012
February 2012
(Source: www.bseindia.com)
No of shares
7.32
6.38
5.74
5.61
6.93
5.47
5.87
4.95
2.92
3.45
5.10
4.27
207221
154182
92567
193051
147667
72337
Total turnover
( ` in Lacs)
13.59
8.61
3.57
8.89
8.98
3.47
Other details :
x
The face value of shares has been sub divided from ` 10 to ` 2 w.e.f. 03-06.2011
The Board of Directors of the company comprises of
Sr. No
1.
2.
3.
4.
5.
Name
Shrikant Jesingbhai Parikh
Amul Kumar Jethabhai Patel
Arpita Shrikant Parikh
Jeshinglal Badrmal Parikh
Vikram Jeshinglal Parikh
Designation
Director
Director
Director
Director
Director
Brief Consolidated Audited Financial of last three year
(` In Crores)
Particular
Equity Share Capital
Reserves
Sales
Profit after Tax
EPS ( in `)
Net Asset Value ( in `)
31/03/2009
31/03/2010
7.13
4.17
0.95
1.96
3.07
17.72
31/03/2011
7.13
10.20
67.20
6.78
6.38
16.32
14.38
54.89
488.94
32.45
26.34
56.23
The Company is neither a sick company within the meaning of the Sick Industrial Companies (Special
Provisions) Act, 1995 nor is under winding up.
151
There are no defaults in meeting any statutory/ bank/ institutional dues and no proceedings have been
initiated for economic offences against the Company
A. Unlisted Group Companies
1. C Mahendra Jewels Private Limited
Date of Incorporation
CIN
PAN
Type of Business
January 01, 1992
U15200MH1992
AAACC1477C
To deal in Gems and Jewelries
History of the Company
C Mahendra Diamond Jewelllery Private Limited was incorporated on January 02, 1992 with registrar of
the company Mumbai, Maharashtra. The register office of the company at G-40, Prime Mall, Ground
Floor, IRLA Vile Parle West Mumbai Maharashtra 400056 India Pursuant to name change from C
Mahendra Diamond Jewelllery Private Limited to C Mahendra Jewels Private Limited the fresh
incorporation certificate received by company on January 20th, 1994.
Shareholding Pattern of Promoter Company as on September 30, 2011
Sr. No
Name of the Shareholders
No. of Shares
Mahendra Chandulal Shah
5,25,000
.
Champak Kirtilal Shah
5,25,000
.
Jesingbhai Badramal Parikh
9,75,000
.
Nirvani Trust
9,75,000
Total
30,00,000
Composition of Directors of the Company
Sr. No
Name
Shrikant Jesingbhai Parikh
1.
Arpita Shrikant Parikh
2.
Jesingbhai Badamal Parikh
3.
Sameer Pravin Shah
4
Mahendra Chandulal Shah
5.
Pravin kiritlal Mehta
6.
Champak kiritlal Mehta
7.
Designation
Director
Director
Director
Director
Director
Director
Director
Brief Audited Financial of last three year
(` in crores)
Particular
31/03/2009
31/03/2010
1.50
Equity Share Capital
24.11
Reserves
0.05
Sales and Other
Income
0.03
Profit after Tax
0.17
EPS ( in `.)
170.76
Net Asset Value ( in `.)
The Company is neither a sick company within the meaning of the
Provisions) Act, 1995 nor is under winding up.
31/03/2011
3.00
22.78
1.07
3.00
22.53
0.01
(1.34)
(0.25)
(8.26)
(0.83)
85.93
85.09
Sick Industrial Companies (Special
There are no defaults in meeting any statutory/ bank/ institutional dues and no proceedings have been
initiated for economic offences against the Company
152
c. Partnership firm
1. RSBL Jewels
Date of commencement
Type of Business
June 27,2010
Trading and manufacturing of plain and diamond
studded jewelries.
4A, Trishila Premises, 122, Sheikh Menon Street,
Zaveri Bazar,Mumbai-400002
Principal Place of the Business
History of the Firm
RSBL Jewels became part of the group pursuant to a partnership deed dated June 27,2010 between
Mr.Mehul Dineshkumar Kothari and Minal Industries Limited.
Profit and Loss Sharing Ratio
Sr. No
1.
2.
Partner
Mehul Dineshkumar Kothari
Minal industries Ltd
Total
Ratio
1%
99%
100%
Brief Financial of last three year
(` In crores)
31/03/2011
12.48
117.86
7.34
Particular
Partners Capital
Sales
Profit after Tax
2. Minal Plastic Product
Date of commencement
Type of Business
Principal Place of the Business
September 27,1984
Manufacturer of Machinery part
214/A paradise Complex Sayaji Gunj, Vadodara
History of the Company:Minal Plastic Products was formed pursuant to a partnership deed dated September 27, 1984 between
Mr Shrikant Jeshingbhai Parikh, Mr. Vikram Jeshingbhai Parikh, nayan Jesingbhai Parikh and Putliben
Badarmal Parikh.
Profit and Loss Sharing Ratio
Sr. No
1.
2.
3.
Partner
Shrikant Jeshinglal Parikh
Vikram Jeshinglal Parikh
Jeshinglal Badarmal Parikh
Total
Ratio
65%
15%
20%
100%
Brief Financial of last three year
(` in crores)
Particular
Partners Capital
Sales
Profit after Tax
31/03/2009
31/03/2010
0.002
0.01
(0.01)
153
31/03/2011
0.001
0.01
(0.001)
0.09
0.03
0.00
3. Minal Electrical and Engineering
Date of commencement
Type of Business
Principal Place of the Business
November 16 ,1982
Deal in Textile Machinery
21 Dhanushya Society , Sama Road Baroda
History of the Firm
Minal Electrical and Engineering was formed pursuant to a partnership deed dated November 16,1982
between Nayanbhai J.Parikh, Anilaben S Parikh, Manju V, Parikh Badarmal Ratanlal Parikh (H.U.F.) and
savitaben J.Parikh.
Profit and Loss Sharing Ratio
Sr. No
Partner
Anilaben S Parikh
1.
Vikram j Parikh
2.
Total
Ratio
51%
49%
100%
Brief Financial of last three year
Particular
Partners Capital
Sales
Profit after Tax
31/03/2009
0.013
0.39
0.0007
31/03/2010
(0.08)
0.31
0.0014
(` in crores)
31/03/2011
(0.14)
0.29
0
DETAILS ABOUT COMPANIES/ FIRMS FROM WHICH PROMOTERS HAVE DISASSOCIATED
DURING THE LAST THREE YEARS
Our Promoter Mr. Shrikant Parikh and Jesingbhai Parikh has not been disassociated from any company
during the last 3 years:
Common Pursuits
There are no common pursuits in the business of the Company and other Companies promoted by the
Promoters other than as described in the Draft Red Herring Prospectus.
Sales or Purchases between Companies in the Group
There have been no sales or purchases between companies in the Group exceeding in value in the
aggregate 10% of the total sales or purchases of the Company, except those transactions mentioned
under Related Party Transactions, “Annexure Xl” beginning on page 141 under Chapter titled “Auditors’
Report and Financial Information of our Company” beginning on page 126 of the Draft Red Herring
Prospectus.
Business Interests amongst our Company and Group Companies /Associate Companies
Except as mentioned under Related Party Transactions, “AnnexureXl” beginning on page 141 under
Chapter titled “Auditors’ Report and Financial Information of our Company” there is no business interest
amongst Group Companies.
Changes in Accounting Policies in the last three years
Except as mentioned under the paragraph Changes in Significant Accounting Policies, “Annexure IV”
beginning on page 133 under Chapter titled “Auditors’ Report and Financial Information of our Company”
beginning on page 126 of the Draft Red Herring Prospectus, there have been no changes in the
accounting policies in the last three years.
154
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
You should read the following discussion of our standalone financial condition and results of operations
together with our financial statements and the reports thereon and annexures thereto, which have been
restated in accordance with paragraph B (1) of Part II of Schedule II to the Companies Act, 1956 and with
the SEBI (ICDR) Regulations, 2009, and which are all included in this Draft Red Herring Prospectus. The
financial statements are prepared in conformity with Indian GAAP and the Companies Act. Our financial
year ends on March 31st of each year, so all references to a particular year are to the twelve month ended
March 31st of that year.
In this section, unless the context otherwise requires and except for discussion of operations, a reference
to "our Company" "we", "us" and "our" refers to C. Mahendra InfoJewels Ltd. and its Group.
Business Overview
For detail information of our business overview, please refer to chapter titled “Business Overview” on
page 87 of this Draft Red Herring Prospectus.
Result of operations
The following table sets forth select financial data from our restated profit and loss accounts for the period
ended March 31, 2011, 2010 and 2009, the components of which are also expressed as a percentage of
total income for such periods. Our restated profit and loss account provided under the head “Financial
Information” gives details about our sources of revenue for the company.
(` in Crores)
Particulars
Income
Income from operations
% of Total Income
Other Income
% of Total Income
Total Income
30/09/2011
`
70.78
90.06
7.82
9.94
78.59
Expenditure
Operating Cost
% of Total Income
Staff Cost
% of Total Income
Admin.Selling & Distr.
Exp.& Misc.
% of Total Income
PBIDT
0.11
0.15
12.94
% of Total Income
16.47
Depreciation
% of Total Income
PBIT
0.30
0.38
12.64
64.27
81.78
1.24
1.58
Income
Income from
operations
Increase/Decrease(%)
Other Income
Increase/Decrease(%)
Total Income
Increase/Decrease(%)
Expenditure
Operating Cost
Increase/Decrease(%)
Staff Cost
Increase/Decrease(%)
Admin.Selling & Distr.
Exp.& Misc.
Increase/Decrease(%)
PBIDT
% of profit to total
Income
Increase/Decrease(%)
Depreciation
Increase/Decrease(%)
PBIT
155
31/03/2011
`
31/03/2010
`
31/03/09
`
160.83
536.45
1.41
2539.03
162.24
540.68
25.27
-39.00
0.05
-99.62
25.32
-54.51
41.43
16.09
14.24
384226.21
55.67
55.97
146.48
563.06
2.86
87.29
22.09
-41.33
1.53
0.77
37.65
16.41
1.51
-47.24
0.36
3050.56
10.60
0.01
-93.29
3.79
0.17
-55.80
16.34
6.53
179.67
0.59
-13.14
10.00
14.96
-76.81
0.68
-12.79
3.11
29.34
21814.19
0.78
-13.56
15.55
% of Total Income
Intrest & financial
Charges
% of Total Income
Profit After Intrest& before
Tax
% of Total Income
Tax Effect
% of Total Income
PAT
16.08
12.07
15.36
2.50
3.18
9.57
% of Net Profit to Total
Income
12.18
0.57
0.72
Increase/Decrease(%)
Intrest & financial
Charges
Increase/Decrease(%)
Profit After Intrest&
before Tax
Increase/Decrease(%)
Tax Effect
Increase/Decrease(%)
PAT
Increase/Decrease(%)
% of Net Profit to Total
Income
221.97
-80.02
-1974.74
1.00
-0.71
1.01
-30.75
1.45
-36.33
9.01
328.50
0.07
2.10
-85.10
0.01
14.10
-553.38
0.00
8.92
326.05
2.09
-85.14
14.10
-553.30
5.50
8.27
25.33
FINANCIAL INFORMATION FOR THE PERIOD ENDED ON 30TH SEPTEMBER, 2011
Revenue from Operation
The turnover the company is ` 70.78 crores which is 90.06 % of total income during the said period
Expenditure
Operating Cost
Operating cost of the company is ` 64.27 crores which is 81.78 % of total income during the said period.
Staff cost
Staff cost is ` 1.24 crores which is 1.58 % of the total income during the said period.
Administrative and Selling & Distribution Expenses
Administrative and selling & distribution Expenses is ` 0.11 crores which is 0.15 % of the total Income
during the said period.
Profit before Interest, Depreciation and Tax (PBDIT)
PBDIT is ` 12.94 crores which is 16.47% of total income during the said period.
Depreciation
Depreciation is ` 0.30 crores for the said period which is 0.38% of the total Income.
Interest
Interest is ` 0.57 crores for the said period which is 0.72% of the total income.
Profit After Tax
Profit After Tax is ` 9.57 crores for the said period which is 12.18 % of the total income.
156
COMPARISON OF FINANCIAL YEAR 2011 WITH FINANCIAL YEAR 2010
Revenue from Operation
The turnover of the company increased to ` 160.83 crores for the FY 2011 as compared to ` 25.27 crores
during the FY 2010 showing an increase of 536.45 %, which was primarily due to starting trading activity
from SEZ , Surat and exporting diamond in Dubai and increase in turnover of Diamond Studded Jewellery
in the FY 2011 compared to Turnover in FY 2011.
Expenditure
Operating Cost
Operating cost increased to ` 146.48 crores for the financial year 2011 as compared to ` 22.09 crores for
the FY 2010 showing an increase of 563.06%. on account of inclusion of purchase of material for trading
activity of diamond.
Staff cost
Staff cost increased to Rs. 2.86 crores for the FY 2011 from Rs. 1.53 crores for the year ended March 31,
2010 showing increase of 87.29 % on account of increase of employees on contact basis in the FY 2011
average 229 employees compared to average 98 employees in the FY 2010.
Administrative and Selling & Distribution Expenses
Administrative and selling & distribution Expenses have been increased to ` 0.36 crores for the FY 2011
from ` 0.01 crores for the FY 2010 showing an increase of 3050.56%. It was due to writing off preliminary
and preoperative expenses of Rs.0.21 crores in the FY 2011 and increase in cost of Export freight,
clearing and forwarding expenses in FY 2011 on account of growth of business.
Profit Before Interest, Depreciation and Tax (PBDIT)
PBDIT increased to ` 10.60 crores during the FY 2011 from ` 3.79 crores for the FY 2010 showing an
increase of 179.67% mainly on account of profit from trading activity of diamond which company has
started in the FY 2011. The profit for the FY 2011 is 6.53 % as against 14.96 % for the FY 2010 of the
total income from operation.
Depreciation
Depreciation has been decreased to ` 0.59 crores for the FY 2011 from ` 0.68 crores for the FY 2010
showing a decrease of 13.14 % .
Interest and Financial Charges
Interest and Financial Charges decreased to ` 1.00 crores for the FY 2011 from ` 1.01 crores for FY
2010 showing a decrease of 0.71 %. The Decrease is minor and due to less utilization of limit during the
FY2011 compared to FY2010.
Profit after Tax
Profit after Tax was ` 8.92 crores during the FY 2011 compared to ` 2.09 during the FY 2010
showing increase of 326.05 % on account of profit from Trading activity and Foreign exchange gain of
157
`1.41 crores in the FY 2011compare to Loss on account of foreign exchange fluctuation of
`7.90 crores in the FY 2010.
COMPARISON OF FINANCIAL YEAR 2010 WITH FINANCIAL YEAR 2009
Revenue from Operation
The turnover of the company decreased to `. 25.27 crores during the FY 2010 as compared to `. 41.43
crores during the FY 2009 showing a fall of 39%, which was primarily due to reduction of diamond
trading activity in the FY 2010 compared to FY2009.
Expenditure
Operating Cost
Operating cost decreased to `. 22.09 crores for the FY 2010 from `.37.65 crores for the FY 2009 showing
decrease of 41.33 % on account of reduction of business.
Staff cost
Staff cost decreased to ` 1.53 crores for the FY 2010 from `.1.51 crores for FY 2009 showing decrease
of 0.77 %.
Administrative and Selling & Distribution Expenses
Administrative and Other Expenses have been decreased to `. 0.01 crores for the FY 2010 from `. 0.17
crores for the FY 2009 showing an decrease of 93.29 % due to discontinue of export insurance in the
FY2010 and reduction in cost of Export freight, clearing and forwarding expenses in FY 2010 on account
of reduction of business.
Profit before Interest, Depreciation and Tax (PBDIT)
PBDIT decreased to `. 3.79 crores during the FY 2010 from `. 16.34 crores for the FY 2009 showing
decrease of 76.81 % mainly on account of decrease in turnover and loss of `.7.90 crores due to foreign
exchange fluctuation.
Depreciation
Depreciation has been decreased to `. 0.68 crores for the FY 2010 from `. 0.78 crores for the FY 2009
showing an decrease of 12.79 % .
Interest and Financial Charges
Interest and Financial Charges decreased to `. 1.01 crores for the FY 2010 from `. 1.45 crores for FY
2009 showing decrease of 30.75%.on account of reduction of secured loans from ` 14.73 crores to `
11.33 crores.
Profit after Tax
Profit after Tax was decreased to `.2.09 crores during the FY 2010 from `. 14.10 crores in the FY 2009
showing an decrease of 85.14 % on account of decrease in turnover and loss of `.7.90 crores due to
foreign exchange fluctuation as against the Foreign exchange gain in FY 2009 amounting to Rs 14.10
crores.
158
Related Party Transactions
For further information please refer “Annexure Xl” beginning on page 141 under Chapter titled “Auditors’
Report and Financial Information of our Company” beginning on page 126 of the Draft Prospectus.
Financial Market Risks
We are exposed to financial market risks from changes in borrowing costs, interest rates and inflation.
Interest Rate Risk
Any change in the interest rate on Credit Facilities, will have negative impact on the company’s
performance.
Exchange Rate Risk
The Company will be subject to exchange risk for its import or export transactions.
Effect of Inflation
Inflation if any on higher side may effect on demand of the product.
Factors that may affect the results of the operations:
1. Unusual or infrequent events or transactions including unusual trends on account of business
activity, unusual items of income, change of accounting policies and discretionary reduction of
expenses etc.
There have been no unusual or infrequent events or transactions that have taken place.
2. Significant economic changes that materially affected or are likely to affect income from
continuing operations.
There are no significant economic changes that may materially affect or likely to affect income from
continuing operations.
3. Known trends or uncertainties that have had or are expected to have a material adverse impact
on sales, revenue or income from continuing operations.
Apart from the risks as disclosed under Section “Risk Factors” beginning on page 14 in the Draft
Prospectus, in our opinion there are no other known trends or uncertainties that have had or are expected
to have a material adverse impact on revenue or income from continuing operations.
4. Future changes in relationship between costs and revenues, in case of events such as future
increase in labour or material costs or prices that will cause a material change are known.
Our Company’s future costs and revenues will be determined by demand/supply situation, government
policies.
5. Extent to which material increases in net sales or revenue are due to increased sales volume,
introduction of new products or services or increased sales prices.
Increases in revenues are by and large linked to increases in volume of business.
159
6. Total turnover of each major industry segment in which the issuer company operated.
For details on the total turnover of the industry please refer to Chapter “Industry Overview” beginning on
page 74 of the Draft Prospectus.
7. Status of any publicly announced new products or business segment.
Our Company has not announced any new product and segment, other than through the Draft
Prospectus.
8. The extent to which business is seasonal.
Our Company’s business is not seasonal in nature. However the demand for our products increased
during October to February on account of New year and valentine day celebration in USA.
9. Any significant dependence on a single or few suppliers or customers.
The total turnover of the company is in The USA and among few customers only, The majority turnover
of the company is from not more than five customers and any loss or significant decrease in the volume
of business from our major customer for any reason would have an adverse effect on our business,
financial condition and results of operations. Moreover, if This customer was to experience liquidity
problems or insolvency, we would face credit risk with respect to account receivables from such
customer. In addition, our customer may in the future develop and tie up with other manufacturer for
marketing the product such event or any delay or default in payment by our customer for product sold
may adversely affect our business, financial condition and results of operations. Further, the income from
this customer may vary from year to year, making it hard to forecast future business needs, particularly
since we are not the exclusive product supplier to our customer.
As far as raw material is concerned Our Company is purchasing gold from MMTC and Nationalised bank.
The other rwa material is either purchased from local market and from importing the same. The suppliers
are many and the company is not depending upon few suppliers. The financial crisis, non availability of
raw material, production disruption , any labour problem in our group concern would have an adverse
effect on our business, financial condition and results of operations.
10. Competitive conditions.
Competitive conditions are as described under the Chapters “Industry Overview” and “Business
Overview” beginning on pages 74 and 87, respectively of the Draft Prospectus.
160
Financial Indebtedness
Our Company is availing following Working Capital facilities from the following bank, details of which are
as under:Type of
Loan
Sanction
Amount
(` in
crores)
Bank of India
(1)
5.30
Export
Packing
Credit
( Sub Limit
Gold Loan
3.32 crores)
( ETR 180
days)
(2)
5.30
FBP/FBD/FB
N/PSFC
ODFO
BC/DA
(180days)
( sub Limit
Bills on
Associates
2.65 crores)
Maximum 6.84
Limit of
1 and 2
Union Bank of India
(1)
5.16
FDBP/FUDB
P/FBP/AFDB
C
(Export Bills
of
180daysDA)
( sub Limit
Direct Bills
4.13
Packing
Credit 2.55
Gold Loan
1.15)
Purpose
Amount
O/s as on
28.02.2012
(` in
crores)
Interest
Rate
Security (Combined
Security)
Working
Capital
Purpose
4.06
10.25%
4. Hypothecation of Stock
and Receivables.
Period
One year
subject to
renewal
5. Equitable mortgage of
factory premises at
Plot No 16(P),17,28 &
29(P), seepz.
6. Hypothecation of Plant
and Machinery,
furniture & fixtures,
office Equipments etc.
(security to be shared
on pari passu basis
with consortium bank
Union Bank of India
Working
Capital
Purpose
Working
Capital
Purpose
2.36
10.25%
161
6. Hypothecation of
Stock of Raw
Material s, Work in
progress, Finished
goods constituting
Gold, Platinum,
Diamonds, Silver,
Gemstones, and
Jewellery of These
Items and Export
Receivables
7. Equitable mortgage
of factory premises
at Plot No
16(P),17,28 &
29(P), seepz
8. Hypothecation of
Plant and
Machinery, furniture
& fixtures, office
Equipments etc.
(security to be
One year
subject to
renewal
One year
subject to
renewal
shared on pari
passu basis with
consortium bank
9. Personal Guarantee
of Shrikant Parikh,
Jesingbhai Parikh
and Arpita Shrikant
Parikh
10.
Corporate
guarantee of Minal
Industries Limited
and C. Mahendra
Jewels Private
Limited
Additional Terms and Conditions
12. Stamped undertaking to be furnished by the company for not withdrawing unsecured loan of
` 23.85 crores till Deb/Equity improves.
13. Reconstituted Company to execute security documents and create securities property within
2 months failing which penal interest to be charged @ 1% p.a.
14. The Company / firm to execute necessary security documents / renewal documents for
sanctioned / enhanced limit(s) duly supported by Board resolution and create and register
stipulated charges with the authorities specified for the purpose within stipulated time limit
before release of sanctioned / enhanced limits.
15. Guarantor (s) All fund based and non fund based facilities to be guaranteed by i) Shri
Shrikant J Parikh (joint & Several), ii) C Mahendra Jewels Pvt. Ltd. and iii) Minal Industries
Ltd. The Company Shall not pay any guarantee commission to the guarantors.
16. Packing Credit will be allowed only against/ L.C.s opened by acceptable banks and confirmed
export orders from approved parties and will be extended for periods not beyond the last
shipment date. Company / Firm to submit details of orders received on monthly for EPC
disbursement.
17. Bank will obtain status report on drawees before purchase/discount of the bills and such
reports will be updated annually; availability of a satisfactory status report shall be a prerequisite for such purchase / discount of bills.
18. The Company/firm to submit copy of statutory permission/clearances like ‘NOC’ from
Pollution control Board and ensure for timely renewal of same from time to time.
19. Pre shipment and post shipment limits to be secured by ECIB-WT-PC & ECIB-WT-PS
Schemes of ECGC, with the option to the Bank for obtaining comprehensive ECGC coverage
depending upon the risk prevailing in the country where export is being made. Premium
payable to ECGC by the Bank in respect of ECIB-WT-PC policy is to be borne by
firm/Company.
20. Any default in complying with terms of sanction within the stipulated time will attract penal
interest of 1% p.a. from the date of expiry of such time.
21. The Company’s/firm’s entire banking business (including merchant banking Dividend and
interest payments) should be routed through us/members of the consortium proportionate to
the sharing of the working capital facilities.
22. Restrictive Covenants.
*
effect any adverse changes in company’s/firm’s capital structure.
*
formulate any scheme of amalgamation or merger or reconstruction.
*
implement any scheme of expansion or diversification or capital expenditure except
normal replacements indicated in fund flow statement submitted to and approved by the
Bank
*
enter into any borrowing or non-borrowing arrangements either secured or unsecured
with any other bank, financial institution, company, firm or otherwise or accept deposits in
excess of the limits laid down by Reserve Bank of India.
162
*
*
*
*
*
*
*
invest by way of share capital in or lent or advance funds to or place deposits with any
other company/firm concern (including group companies / associates)/persons. Normal
trade credit or security deposit in the normal course of business or advance to employees
can, however be extended.
undertake guarantee obligations on behalf of any other company / firm /person.
declare dividend for any year except out of profits relating to that year after meeting all
the financial commitments to the bank and making all due and necessary provisions.
make any drastic change(s) in its management set-up.
approach capital market for mobilizing additional resources either in the form of Debts or
equity.
sell or dispose off or create security or encumbrances on the assets charged to the bank
in favour of any other bank, financial institution, company, firm, individual.
re-pay monies brought in by the promoters, partners, directors, share holders, their
relatives and friends in the business of the company/firm by way of deposits/loans/share
application money etc.
.
163
SECTION VII - LEGAL AND OTHER REGULATORY INFORMATION
OUTSTANDING LITIGATIONS, MATERIAL DEVELOPMENTS AND OTHER DISCLOSURES
Except as described below, there are no outstanding litigation, suits, criminal or civil prosecutions,
statutory or legal proceedings including those for economic offences, tax liabilities, show cause notices or
legal notices pending against our Company, Directors and Promoter Group Companies and there are no
defaults including non payment of statutory dues, over-dues to banks/financial institutions, defaults
against banks/financial institutions, defaults in creation of full security as per the terms of issue/other
liabilities, proceedings initiated for economic / civil / any other offences (including past cases where
penalties may or may not have been awarded and irrespective of whether they are specified under
paragraph (I) of Part 1 of Schedule XIII of the Companies Act) other than unclaimed liabilities of our
Company, and / or Promoter Group Companies except as stated below, and no disciplinary action has
been taken by SEBI or any stock exchange against our Company, its Directors and / or the Promoter
Group Companies. Unless stated to the contrary, the information provided below is as on the date of the
Draft Red Herring Prospectus.
Neither our Company, the Promoter Group Companies and / or the Directors are associated or were
associated in the past, with Companies which have been declared as willful defaulters by the RBI or any
other Governmental authority and, except as disclosed in this section in relation to litigation, there are no
violations of securities laws committed by them in the past or pending against them.
This chapter has been divided into following parts
1.
2.
3.
4.
5.
6.
Contingent Liability
Outstanding Litigations involving our Company
Outstanding Litigations involving our Promoters/Directors
Outstanding Litigations involving our Group Companies
Amounts owed to small scale undertakings
Material Developments
1. Contingent liabilities not provided for as on September 30, 2011.
The contingent liabilities not provided for and outstanding guarantees as on June 30, 2010 (as disclosed
in our Company’s restated consolidated financial statements) are as set out below:
(` in crores)
Particulars
As at September
30, 2011
Bond cum Undertaking given by the Company to the President of India towards
147.74
manufactue of goods for Exports in Special Economic Zone
147.74
TOTAL
2. Outstanding Litigations involving our Company
A. Outstanding Litigations against our Company
Notice for proceeding U/s 138 read with Section 141 of The Negotiable Instrument Act
The Partnership firm C. Mahendra Infojewels (now known as C. Mahendra Infojewels Limited) has issued
cheques to retiring partners against the outstanding capital at the time of retirement. Notices have been
issued on 15th July, 2011 by Mr. Mahendra C. shah and Mr. Champak K.Mehta (erstwhile partners of
Partnership Firm of C. Mahendra Infojewels) for dishonored of Cheques amounting to ` 23,35,75,000
164
issued to Mahendra C. Shah and Amounting to ` 23,35,50,000 to Champak K.Mehta respectively for
proceedings, civil and criminal, including the proceedings u/s 138 read with section 141 of The Negotiable
Instrument Act in the competent court. After the notices the company had replied to both the partners and
at present the company is not aware of any further course of action taken by the erstwhile partners after
issue of notices.
Notice for recovery of cheques issued by C. Mahendra Infojewels. (now known as C. Mahendra
Infojewels Limited )
The Partnership firm C. Mahendra Infojewels (now known as C. Mahendra Infojewels Limited) has issued
cheques to retiring partners against the outstanding capital at the time of retirement. Notice has been
issued to the Company by C. Mahendra International Limited, a retiring partner for payment of `. 5, 10,
00,000 along with interest @ 12% per annum from 01.07.2010 till payment. The notice has been issued
for legal proceedings against the company and partners of C. Mahendra Infojewels in the competent court
of law at Mumbai. After the notice the company had replied for the said notice and at present the
Company
is not aware of any further course of action taken by the erstwhile partner after issue of
notice.
Notice for recovery of cheques issued by C. Mahendra Infojewels. (Now known as C. Mahendra
Infojewels Limited)
The Partnership firm C. Mahendra Infojewels (now known as C. Mahendra Infojewels Limited) has issued
cheques to retiring partners against the outstanding capital at the time of retirement. Notice has been
issued to the Company by Champak Kirtilal Mehta, a retiring partner for payment of `. 6,24,00,000 along
with interest @ 12% per annum from 01.07.2010 till payment. The notice has been issued for legal
proceedings against the company and partners of C. Mahendra Infojewels in the competent court of law
at Mumbai. After the notice the Company had replied for the said notice and at present the Company is
not aware of any further course of action taken by the erstwhile partner after issue of notice.
Notice for recovery of cheques issued by C. Mahendra Infojewels. (now known as C. Mahendra
Infojewels Limited )
The Partnership firm C. Mahendra Infojewels (now known as C. Mahendra Infojewels Limited) has issued
cheques to retiring partners against the outstanding capital at the time of retirement. Notice has been
issued to the Company by Mahendra C.Shah, a retiring partner for payment of ` 6,42,00,000 along with
interest @ 12% per annum from 01.07.2010 till payment. The notice has been issued for legal
proceedings against the company and partners of C. Mahendra Infojewels in the competent court of law
at Mumbai. After the notice the Company had replied for the said notice and at present the Company is
not aware of any further course of action taken by the erstwhile partner after issue of notice.
Notice for recovery of cheques issued by C. Mahendra Infojewels. (Now known as C. Mahendra
Infojewels Limited)
The Partnership firm C. Mahendra Infojewels (now known as C. Mahendra Infojewels Limited) has issued
cheques to retiring partners against the outstanding capital at the time of retirement. Notice has been
issued to the Company by Kanubhai C Shah, a retiring partner for payment of `. 90, 00,000 along with
interest @ 12% per annum from 01.07.2010 till payment. The notice has been issued for legal
proceedings against the company and partners of C. Mahendra Infojewels in the competent court of law
at Mumbai. After the notice the Company had replied for the said notice and at present the Company is
not aware of any further course of action taken by the erstwhile partner after issue of notice.
165
Notice for recovery of cheques issued by C. Mahendra Infojewels. (Now known as C. Mahendra
Infojewels Limited)
The Partnership firm C. Mahendra Infojewels (now known as C. Mahendra Infojewels Limited) has issued
cheques to retiring partners against the outstanding capital at the time of retirement. Notice has been
issued to the Company by Paras C. Mehta, a retiring partner for payment of `. 40, 00,000 along with
interest @ 12% per annum from 01.07.2010 till payment. The notice has been issued for legal
proceedings against the company and partners of C. Mahendra Infojewels in the competent court of law
at Mumbai. After the notice the Company had replied for the said notice and at present the Company is
not aware of any further course of action taken by the erstwhile partner after issue of notice.
Notice for recovery of cheques issued by C. Mahendra Infojewels. (Now known as C. Mahendra
Infojewels Limited)
The Partnership firm C. Mahendra Infojewels (now known as C. Mahendra Infojewels Limited) has issued
cheques to retiring partners against the outstanding capital at the time of retirement. Notice has been
issued to the Company by Prakash K.Mehta, a retiring partner for payment of `. 1, 05, 00,000 along with
interest @ 12% per annum from 01.07.2010 till payment. The notice has been issued for legal
proceedings against the company and partners of C. Mahendra Infojewels in the competent court of law
at Mumbai. After the notice the Company had replied for the said notice and at present the Company is
not aware of any further course of action taken by the erstwhile partner after issue of notice.
Notice for recovery of cheques issued by C. Mahendra Infojewels. (now known as C. Mahendra
Infojewels Limited )
The Partnership firm C. Mahendra Infojewels (now known as C. Mahendra Infojewels Limited) has issued
cheques to retiring partners against the outstanding capital at the time of retirement. Notice has been
issued to the Company by Pravin C Shah, a retiring partner for payment of ` 96, 00,000 along with
interest @ 12% per annum from 01.07.2010 till payment. The notice has been issued for legal
proceedings against the company and partners of C. Mahendra Infojewels in the competent court of law
at Mumbai. After the notice the Company had replied for the said notice and at present the Company is
not aware of any further course of action taken by the erstwhile partner after issue of notice.
Notice for recovery of cheques issued by C. Mahendra Infojewels. (now known as C. Mahendra
Infojewels Limited )
The Partnership firm C. Mahendra Infojewels (now known as C. Mahendra Infojewels Limited) has issued
cheques to retiring partners against the outstanding capital at the time of retirement. Notice has been
issued to the Company by Pravin K.Mehta, a retiring partner for payment of ` 92, 00,000 along with
interest @ 12% per annum from 01.07.2010 till payment. The notice has been issued for legal
proceedings against the company and partners of C. Mahendra Infojewels in the competent court of law
at Mumbai. After the notice the Company had replied for the said notice and at present the Company is
not aware of any further course of action taken by the erstwhile partner after issue of notice.
Notice for recovery of cheques issued by C. Mahendra Infojewels. (now known as C. Mahendra
Infojewels Limited )
The Partnership firm C. Mahendra Infojewels (now known as C. Mahendra Infojewels Limited) has issued
cheques to retiring partners against the outstanding capital at the time of retirement. Notice has been
issued to the Company, by Samir P. Shah, a retiring partner for payment of ` 78,00,000 along with
interest @ 12% per annum from 01.07.2010 till payment. The notice has been issued for legal
166
proceedings against the company and partners of C. Mahendra Infojewels in the competent court of law
at Mumbai. After the notice the company had replied for the said notice and at present the company is not
aware of any further course of action taken by the erstwhile partner after issue of notice.
Notice for recovery of cheques issued by C. Mahendra Infojewels. (now known as C. Mahendra
Infojewels Limited )
The Partnership firm C. Mahendra Infojewels (now known as C. Mahendra Infojewels Limited) has issued
cheques to retiring partners against the outstanding capital at the time of retirement. Notice has been
issued to the Company by Sandeep M.Shah, a retiring partner for payment of ` 80, 00,000 along with
interest @ 12% per annum from 01.07.2010 till payment. The notice has been issued for legal
proceedings against the company and partners of C. Mahendra Infojewels in the competent court of law
at Mumbai. After the notice the Company had replied for the said notice and at present the Company is
not aware of any further course of action taken by the erstwhile partner after issue of notice.
Notice for recovery of cheques issued by C. Mahendra Infojewels. (now known as C. Mahendra
Infojewels Limited )
The Partnership firm C. Mahendra Infojewels (now known as C. Mahendra Infojewels Limited) has issued
cheques to retiring partners against the outstanding capital at the time of retirement. Notice has been
issued to the Company by Suresh K.Mehta, a retiring partner for payment of ` 79, 00,000 along with
interest @ 12% per annum from 01.07.2010 till payment. The notice has been issued for legal
proceedings against the company and partners of C. Mahendra Infojewels in the competent court of law
at Mumbai. After the notice the Company had replied for the said notice and at present the Company is
not aware of any further course of action taken by the erstwhile partner after issue of notice.
INCOME TAX
2007-08
The assessment order has been passed under section 143(3) of the Income Tax Act, 1961 assessing
gross total income of ` 4, 11,250 and issued demand notice of `. 1, 70,542 under section 156 of The
Income Tax 1961 on 7th October,2010 for Asst year 2007-08. The demand is not yet paid by the
company.
B. Outstanding Litigations by our Company
NIL
3. Outstanding Litigation involving our Promoters
A. Outstanding Litigations against our Promoters/Directors
(i) Minal Industries Limited
Notice for proceeding U/s 138 read with Section 141 of The Negotiable Instrument Act
The Partnership firm C. Mahendra Infojewels ( now known as C. Mahendra Infojewels Limited ) has
issued cheques to retiring partners against the outstanding capital at the time of retirement. Notices have
been issued on 15th July,2011 by Mr. Mahendra C. shah and Mr. Champak K.Mehta (erstwhile partners of
Partnership Firm of C. Mahendra Infojewels) for dishonored of Cheques amounting to ` 23,35,75,000
issued to Mahendra C. Shah and Amounting to ` 23,35,50,000 to Champak K.Mehta respectively for
proceedings, civil and criminal, including the proceedings u/s 138 read with section 141 of The Negotiable
167
Instrument Act in the competent court. After the notices the company had replied to both the partners and
at present the company is not aware of any further course of action taken by the erstwhile partners after
issue of notices.
Notice for recovery of cheques issued by C. Mahendra Infojewels. (now known as C. Mahendra
Infojewels Limited )
The Partnership firm C. Mahendra Infojewels (now known as C. Mahendra Infojewels Limited) has issued
cheques to retiring partners against the outstanding capital at the time of retirement. Notice has been
issued by C. Mahendra International Limited, a retiring partner for payment of ` 5, 10, 00,000 along with
interest @ 12% per annum from 01.07.2010 till payment. The notice has been issued for legal
proceedings against the company and partners of C. Mahendra Infojewels in the competent court of law
at Mumbai. After the notice Minal Industries Limited had replied for the said notice and at present Minal
Industries Limited is not aware of any further course of action taken by the erstwhile partner after issue
of notice.
Notice for recovery of cheques issued by C. Mahendra Infojewels. (now known as C. Mahendra
Infojewels Limited )
The Partnership firm C. Mahendra Infojewels (now known as C. Mahendra Infojewels Limited) has issued
cheques to retiring partners against the outstanding capital at the time of retirement. Notice has been
issued by Champak Kirtilal Mehta, a retiring partner for payment of ` 6,24,00,00,000 along with interest
@ 12% per annum from 01.07.2010 till payment. The notice has been issued for legal proceedings
against the company and partners of C. Mahendra Infojewels in the competent court of law at Mumbai.
After the notice Minal Industries Limited had replied for the said notice and at present Minal Industries
Limited is not aware of any further course of action taken by the erstwhile partner after issue of notice.
Notice for recovery of cheques issued by C. Mahendra Infojewels. (now known as C. Mahendra
Infojewels Limited )
The Partnership firm C. Mahendra Infojewels (now known as C. Mahendra Infojewels Limited) has issued
cheques to retiring partners against the outstanding capital at the time of retirement. Notice has been
issued by Mahendra C.Shah, a retiring partner for payment of ` 6,42,00,00,000 along with interest @
12% per annum from 01.07.2010 till payment. The notice has been issued for legal proceedings against
the company and partners of C. Mahendra Infojewels in the competent court of law at Mumbai. After the
notice Minal Industries Limited had replied for the said notice and at present Minal Industries Limited is
not aware of any further course of action taken by the erstwhile partner after issue of notice.
Notice for recovery of cheques issued by C. Mahendra Infojewels. (now known as C. Mahendra
Infojewels Limited )
The Partnership firm C. Mahendra Infojewels (now known as C. Mahendra Infojewels Limited) has issued
cheques to retiring partners against the outstanding capital at the time of retirement. Notice has been
issued by Kanubhai C Shah, a retiring partner for payment of ` 90, 00,000 along with interest @ 12% per
annum from 01.07.2010 till payment. The notice has been issued for legal proceedings against the
company and partners of C. Mahendra Infojewels in the competent court of law at Mumbai. After the
notice Minal Industries Limited had replied for the said notice and at present Minal Industries Limited is
not aware of any further course of action taken by the erstwhile partner after issue of notice.
168
Notice for recovery of cheques issued by C. Mahendra Infojewels. (now known as C. Mahendra
Infojewels Limited )
The Partnership firm C. Mahendra Infojewels (now known as C. Mahendra Infojewels Limited) has issued
cheques to retiring partners against the outstanding capital at the time of retirement. Notice has been
issued by Paras C. Mehta, a retiring partner for payment of `. 40, 00,000 along with interest @ 12% per
annum from 01.07.2010 till payment. The notice has been issued for legal proceedings against the
company and partners of C. Mahendra Infojewels in the competent court of law at Mumbai. After the
notice Minal Industries Limited had replied for the said notice and at present Minal Industries Limited is
not aware of any further course of action taken by the erstwhile partner after issue of notice.
Notice for recovery of cheques issued by C. Mahendra Infojewels. (now known as C. Mahendra
Infojewels Limited )
The Partnership firm C. Mahendra Infojewels (now known as C. Mahendra Infojewels Limited) has issued
cheques to retiring partners against the outstanding capital at the time of retirement. Notice has been
issued by Prakash K.Mehta, a retiring partner for payment of ` 1, 05, 00,000 along with interest @ 12%
per annum from 01.07.2010 till payment. The notice has been issued for legal proceedings against the
company and partners of C. Mahendra Infojewels in the competent court of law at Mumbai. After the
notice Minal Industries Limited had replied for the said notice and at present Minal Industries Limited is
not aware of any further course of action taken by the erstwhile partner after issue of notice.
Notice for recovery of cheques issued by C. Mahendra Infojewels. (now known as C. Mahendra
Infojewels Limited )
The Partnership firm C. Mahendra Infojewels (now known as C. Mahendra Infojewels Limited) has issued
cheques to retiring partners against the outstanding capital at the time of retirement. Notice has been
issued by Pravin C Shah, a retiring partner for payment of ` 96, 00,000 along with interest @ 12% per
annum from 01.07.2010 till payment. The notice has been issued for legal proceedings against the
company and partners of C. Mahendra Infojewels in the competent court of law at Mumbai. After the
notice Minal Industries Limited had replied for the said notice and at present Minal Industries Limited is
not aware of any further course of action taken by the erstwhile partner after issue of notice.
Notice for recovery of cheques issued by C. Mahendra Infojewels. (now known as C. Mahendra
Infojewels Limited )
The Partnership firm C. Mahendra Infojewels (now known as C. Mahendra Infojewels Limited) has issued
cheques to retiring partners against the outstanding capital at the time of retirement. Notice has been
issued by Pravin K.Mehta, a retiring partner for payment of ` 92, 00,000 along with interest @ 12% per
annum from 01.07.2010 till payment. The notice has been issued for legal proceedings against the
company and partners of C. Mahendra Infojewels in the competent court of law at Mumbai. After the
notice Minal Industries Limited had replied for the said notice and at present Minal Industries Limited is
not aware of any further course of action taken by the erstwhile partner after issue of notice.
Notice for recovery of cheques issued by C. Mahendra Infojewels. (now known as C. Mahendra
Infojewels Limited )
The Partnership firm C. Mahendra Infojewels (now known as C. Mahendra Infojewels Limited) has issued
cheques to retiring partners against the outstanding capital at the time of retirement. Notice has been
issued by Samir P. Shah, a retiring partner for payment of ` 78,00,000 along with interest @ 12% per
annum from 01.07.2010 till payment. The notice has been issued for legal proceedings against the
169
company and partners of C. Mahendra Infojewels in the competent court of law at Mumbai. After the
notice Minal Industries Limited had replied for the said notice and at present Minal Industries Limited is
not aware of any further course of action taken by the erstwhile partner after issue of notice.
Notice for recovery of cheques issued by C. Mahendra Infojewels. (now known as C. Mahendra
Infojewels Limited )
The Partnership firm C. Mahendra Infojewels (now known as C. Mahendra Infojewels Limited) has issued
cheques to retiring partners against the outstanding capital at the time of retirement. Notice has been
issued by Sandeep M.Shah, a retiring partner for payment of ` 80, 00,000 along with interest @ 12% per
annum from 01.07.2010 till payment. The notice has been issued for legal proceedings against the
company and partners of C. Mahendra Infojewels in the competent court of law at Mumbai. After the
notice Minal Industries Limited had replied for the said notice and at present Minal Industries Limited is
not aware of any further course of action taken by the erstwhile partner after issue of notice.
Notice for recovery of cheques issued by C. Mahendra Infojewels. (Now known as C. Mahendra
Infojewels Limited)
The Partnership firm C. Mahendra Infojewels (now known as C. Mahendra Infojewels Limited) has issued
cheques to retiring partners against the outstanding capital at the time of retirement. Notice has been
issued by Suresh K.Mehta, a retiring partner for payment of ` 79, 00,000 along with interest @ 12% per
annum from 01.07.2010 till payment. The notice has been issued for legal proceedings against the
company and partners of C. Mahendra Infojewels in the competent court of law at Mumbai. After the
notice Minal Industries Limited had replied for the said notice and at present Minal Industries Limited is
not aware of any further course of action taken by the erstwhile partner after issue of notice.
Income Tax
Asst Year 2009-10
Intimation under Section 143(1) Of the Income Tax Act
Intimation under Section 143(1) of The Income Tax Act, 1961 was issued for Asst Year 2009-10 on 11th
February, 2011 demanding tax of ` 24, 55,140 and Fringe Benefit Tax of ` 3,400 by the Income Tax
department. The assessee has filed an application under section 154 of the Income Tax Act for
rectification of mistake of including share in profit from partnership firm for calculation of Tax liability under
section 115JB though the same is exempted under section 10 of the Income Tax Act. The rectification
application is pending. The fringe benefit tax of ` 3400 is not paid by the company.
(ii) Shrikant Parikh
( As Director Of C. Mahendra Infojewels Limited and Director of Minal Industries Limited)
Notice for proceeding U/s 138 read with Section 141 of The Negotiable Instrument Act
The Partnership firm C. Mahendra Infojewels ( now known as C. Mahendra Infojewels Limited ) has
issued cheques to retiring partners against the outstanding capital at the time of retirement. Notices have
been issued on 15th July,2011 by Mr. Mahendra C. shah and Mr. Champak K.Mehta (erstwhile partners
of Partnership Firm of C. Mahendra Infojewels) for dishonored of Cheques amounting to ` 23,35,75,000
issued to Mahendra C. Shah and Amounting to ` 23,35,50,000 to Champak K.Mehta respectively for
proceedings, civil and criminal, including the proceedings u/s 138 read with section 141 of The Negotiable
Instrument Act in the competent court. After the notices the company had replied to both the partners and
170
at present the company is not aware of any further course of action taken by the erstwhile partners after
issue of notices.
Notice for recovery of cheques issued by C. Mahendra Infojewels. (now known as C. Mahendra
Infojewels Limited )
The Partnership firm C. Mahendra Infojewels (now known as C. Mahendra Infojewels Limited ) has
issued cheques to retiring partners against the outstanding capital at the time of retirement. Notice has
been issued to Shrikant Parikh being former partner of C. Mahendra Infojewels, Director of C, Mahendra
Infojewels Limited and Director of Minal Industries Limited , by C. Mahendra International Limited, a
retiring partner for payment of ` 5,10,00,000 along with interest @ 12% per annum from 01.07.2010 till
payment. The notice has been issued for legal proceedings against the company and partners of C.
Mahendra Infojewels in the competent court of law at Mumbai. After the notice shrikant Parikh had replied
for the said notice and at present he is not aware of any further course of action taken by the erstwhile
partner after issue of notice.
Notice for recovery of cheques issued by C. Mahendra Infojewels. (now known as C. Mahendra
Infojewels Limited )
The Partnership firm C. Mahendra Infojewels (now known as C. Mahendra Infojewels Limited ) has
issued cheques to retiring partners against the outstanding capital at the time of retirement. Notice has
been issued to Shrikant Parikh being former partner of C. Mahendra Infojewels, Director of C, Mahendra
Infojewels Limited and Director of Minal Industries Limited , by Champak Kirtilal Mehta , a retiring partner
for payment of ` 6,24,00,00,000 along with interest @ 12% per annum from 01.07.2010 till payment.
The notice has been issued for legal proceedings against the company and partners of C. Mahendra
Infojewels in the competent court of law at Mumbai. After the notice shrikant Parikh had replied for the
said notice and at present he is not aware of any further course of action taken by the erstwhile partner
after issue of notice.
Notice for recovery of cheques issued by C. Mahendra Infojewels. (now known as C. Mahendra
Infojewels Limited )
The Partnership firm C. Mahendra Infojewels (now known as C. Mahendra Infojewels Limited ) has
issued cheques to retiring partners against the outstanding capital at the time of retirement. Notice has
been issued to Shrikant Parikh being former partner of C. Mahendra Infojewels, Director of C, Mahendra
Infojewels Limited and Director of Minal Industries Limited , by Mahendra C.Shah , a retiring partner for
payment of ` 6,42,00,00,000 along with interest @ 12% per annum from 01.07.2010 till payment. The
notice has been issued for legal proceedings against the company and partners of C. Mahendra
Infojewels in the competent court of law at Mumbai. After the notice shrikant Parikh had replied for the
said notice and at present he is not aware of any further course of action taken by the erstwhile partner
after issue of notice.
Notice for recovery of cheques issued by C. Mahendra Infojewels. (now known as C. Mahendra
Infojewels Limited )
The Partnership firm C. Mahendra Infojewels (now known as C. Mahendra Infojewels Limited ) has
issued cheques to retiring partners against the outstanding capital at the time of retirement. Notice has
been issued to Shrikant Parikh being former partner of C. Mahendra Infojewels, Director of C, Mahendra
Infojewels Limited and Director of Minal Industries Limited , by Kanubhai C Shah, a retiring partner for
payment of ` . 90,00,000 along with interest @ 12% per annum from 01.07.2010 till payment. The notice
has been issued for legal proceedings against the company and partners of C. Mahendra Infojewels in
171
the competent court of law at Mumbai. After the notice shrikant Parikh had replied for the said notice and
at present he is not aware of any further course of action taken by the erstwhile partner after issue of
notice.
Notice for recovery of cheques issued by C. Mahendra Infojewels. (now known as C. Mahendra
Infojewels Limited )
The Partnership firm C. Mahendra Infojewels (now known as C. Mahendra Infojewels Limited) has issued
cheques to retiring partners against the outstanding capital at the time of retirement. Notice has been
issued to Shrikant Parikh being former partner of C. Mahendra Infojewels, Director of C, Mahendra
Infojewels Limited and Director of Minal Industries Limited , by Paras C. Mehta, a retiring partner for
payment of ` 40,00,000 along with interest @ 12% per annum from 01.07.2010 till payment. The notice
has been issued for legal proceedings against the company and partners of C. Mahendra Infojewels in
the competent court of law at Mumbai. After the notice shrikant Parikh had replied for the said notice and
at present he is not aware of any further course of action taken by the erstwhile partner after issue of
notice.
Notice for recovery of cheques issued by C. Mahendra Infojewels. (now known as C. Mahendra
Infojewels Limited )
The Partnership firm C. Mahendra Infojewels (now known as C. Mahendra Infojewels Limited ) has
issued cheques to retiring partners against the outstanding capital at the time of retirement. Notice has
been issued to Shrikant Parikh being former partner of C. Mahendra Infojewels, Director of C, Mahendra
Infojewels Limited and Director of Minal Industries Limited , by Prakash K.Mehta, a retiring partner for
payment of ` 1,05,00,000 along with interest @ 12% per annum from 01.07.2010 till payment. The
notice has been issued for legal proceedings against the company and partners of C. Mahendra
Infojewels in the competent court of law at Mumbai. After the notice shrikant Parikh had replied for the
said notice and at present he is not aware of any further course of action taken by the erstwhile partner
after issue of notice.
Notice for recovery of cheques issued by C. Mahendra Infojewels. (now known as C. Mahendra
Infojewels Limited )
The Partnership firm C. Mahendra Infojewels (now known as C. Mahendra Infojewels Limited ) has
issued cheques to retiring partners against the outstanding capital at the time of retirement. Notice has
been issued to Shrikant Parikh being former partner of C. Mahendra Infojewels, Director of C, Mahendra
Infojewels Limited and Director of Minal Industries Limited , by Pravin C Shah, a retiring partner for
payment of ` 96,00,000 along with interest @ 12% per annum from 01.07.2010 till payment. The notice
has been issued for legal proceedings against the company and partners of C. Mahendra Infojewels in
the competent court of law at Mumbai. After the notice shrikant Parikh had replied for the said notice and
at present he is not aware of any further course of action taken by the erstwhile partner after issue of
notice.
Notice for recovery of cheques issued by C. Mahendra Infojewels. (now known as C. Mahendra
Infojewels Limited )
The Partnership firm C. Mahendra Infojewels (now known as C. Mahendra Infojewels Limited ) has
issued cheques to retiring partners against the outstanding capital at the time of retirement. Notice has
been issued to Shrikant Parikh being former partner of C. Mahendra Infojewels, Director of C, Mahendra
Infojewels Limited and Director of Minal Industries Limited , by Pravin K.Mehta, a retiring partner for
payment of ` 92,00,000 along with interest @ 12% per annum from 01.07.2010 till payment. The notice
172
has been issued for legal proceedings against the company and partners of C. Mahendra Infojewels in
the competent court of law at Mumbai. After the notice shrikant Parikh had replied for the said notice and
at present he is not aware of any further course of action taken by the erstwhile partner after issue of
notice.
Notice for recovery of cheques issued by C. Mahendra Infojewels. (now known as C. Mahendra
Infojewels Limited )
The Partnership firm C. Mahendra Infojewels (now known as C. Mahendra Infojewels Limited ) has
issued cheques to retiring partners against the outstanding capital at the time of retirement. Notice has
been issued to Shrikant Parikh being former partner of C. Mahendra Infojewels, Director of C, Mahendra
Infojewels Limited and Director of Minal Industries Limited , by Samir P. Shah, a retiring partner for
payment of ` 78,00,000 along with interest @ 12% per annum from 01.07.2010 till payment. The notice
has been issued for legal proceedings against the company and partners of C. Mahendra Infojewels in
the competent court of law at Mumbai. After the notice shrikant Parikh had replied for the said notice and
at present he is not aware of any further course of action taken by the erstwhile partner after issue of
notice.
Notice for recovery of cheques issued by C. Mahendra Infojewels. (now known as C. Mahendra
Infojewels Limited )
The Partnership firm C. Mahendra Infojewels (now known as C. Mahendra Infojewels Limited ) has
issued cheques to retiring partners against the outstanding capital at the time of retirement. Notice has
been issued to Shrikant Parikh being former partner of C. Mahendra Infojewels, Director of C, Mahendra
Infojewels Limited and Director of Minal Industries Limited , by Sandeep M.Shah, a retiring partner for
payment of ` 80,00,000 along with interest @ 12% per annum from 01.07.2010 till payment. The notice
has been issued for legal proceedings against the company and partners of C. Mahendra Infojewels in
the competent court of law at Mumbai. After the notice shrikant Parikh had replied for the said notice and
at present he is not aware of any further course of action taken by the erstwhile partner after issue of
notice.
Notice for recovery of cheques issued by C. Mahendra Infojewels. (now known as C. Mahendra
Infojewels Limited )
The Partnership firm C. Mahendra Infojewels (now known as C. Mahendra Infojewels Limited ) has
issued cheques to retiring partners against the outstanding capital at the time of retirement. Notice has
been issued to Shrikant Parikh being former partner of C. Mahendra Infojewels, Director of C, Mahendra
Infojewels Limited and Director of Minal Industries Limited , by Suresh K.Mehta, a retiring partner for
payment of ` 79,00,000 along with interest @ 12% per annum from 01.07.2010 till payment. The notice
has been issued for legal proceedings against the company and partners of C. Mahendra Infojewels in
the competent court of law at Mumbai. After the notice shrikant Parikh had replied for the said notice and
at present he is not aware of any further course of action taken by the erstwhile partner after issue of
notice.
Income Tax
Asst year 2009-10
An assessment order was passed on 30th December, 2011 making addition of ` 40,00,000 as
unexplained cash credit for the Ast year 2009-10. The Jt. Commissioner of Income Tax has issued tax
demand of ` 20.06 lacs along with Interest under section 234 of the Income Tax Act . The assessing
173
officer has issued notice under Section 274 r.ws 271(1) (c) for filing inaccurate particulars of income. An
appeal has been filed on 20th January,2012 with CIT (Appeals) against the Asst order.
Asst Year 2007-08
The income tax department had issued demand notice under section 143(1) of the Income Tax Act,
1961 for Asst year 2007-08 demanding the payment of ` 24,46,000. Further an application was made
under section 154 of the Income Tax Act for rectification of mistake of not giving credit of TDS already
paid by the assessee. The application is pending.
iii) Jesingbhai Parikh
( As Director Of C. Mahendra Infojewels Limited and Director of Minal Industries Limited)
Notice for proceeding U/s 138 read with Section 141 of The Negotiable Instrument Act
The Partnership firm C. Mahendra Infojewels ( now known as C. Mahendra Infojewels Limited ) has
issued cheques to retiring partners against the outstanding capital at the time of retirement. Notices have
been issued on 15th July,2011 by Mr. Mahendra C. shah and Mr. Champak K.Mehta (erstwhile partners
of Partnership Firm of C. Mahendra Infojewels) for dishonored of Cheques amounting to ` 23,35,75,000
issued to Mahendra C. Shah and Amounting to ` 23,35,50,000 to Champak K.Mehta respectively for
proceedings, civil and criminal, including the proceedings u/s 138 read with section 141 of The Negotiable
Instrument Act in the competent court. After the notices the company had replied to both the partners and
at present the company is not aware of any further course of action taken by the erstwhile partners after
issue of notices.
Notice for recovery of cheques issued by C. Mahendra Infojewels. (now known as C. Mahendra
Infojewels Limited )
The Partnership firm C. Mahendra Infojewels (now known as C. Mahendra Infojewels Limited ) has
issued cheques to retiring partners against the outstanding capital at the time of retirement. Notice has
been issued to Jesingbhai Parikh being former partner of C. Mahendra Infojewels, Director of C,
Mahendra Infojewels Limited and Director of Minal Industries Limited , by C. Mahendra International
Limited, a retiring partner for payment of ` 5,10,00,000 along with interest @ 12% per annum from
01.07.2010 till payment. The notice has been issued for legal proceedings against the company and
partners of C. Mahendra Infojewels in the competent court of law at Mumbai. After the notice Jesingbhai
Parikh had replied for the said notice and at present he is not aware of any further course of action taken
by the erstwhile partner after issue of notice.
Notice for recovery of cheques issued by C. Mahendra Infojewels. (now known as C. Mahendra
Infojewels Limited )
The Partnership firm C. Mahendra Infojewels (now known as C. Mahendra Infojewels Limited ) has
issued cheques to retiring partners against the outstanding capital at the time of retirement. Notice has
been issued to Jesingbhai Parikh being former partner of C. Mahendra Infojewels, Director of C,
Mahendra Infojewels Limited and Director of Minal Industries Limited , by Champak Kirtilal Mehta , a
retiring partner for payment of ` 6,24,00,00,000 along with interest @ 12% per annum from 01.07.2010
till payment. The notice has been issued for legal proceedings against the company and partners of C.
Mahendra Infojewels in the competent court of law at Mumbai. After the notice Jesingbhai Parikh had
replied for the said notice and at present he is not aware of any further course of action taken by the
erstwhile partner after issue of notice.
174
Notice for recovery of cheques issued by C. Mahendra Infojewels. (now known as C. Mahendra
Infojewels Limited )
The Partnership firm C. Mahendra Infojewels (now known as C. Mahendra Infojewels Limited ) has
issued cheques to retiring partners against the outstanding capital at the time of retirement. Notice has
been issued to Jesingbhai Parikh being former partner of C. Mahendra Infojewels, Director of C,
Mahendra Infojewels Limited and Director of Minal Industries Limited , by Mahendra C.Shah, a retiring
partner for payment of ` 6,42,00,00,000 along with interest @ 12% per annum from 01.07.2010 till
payment. The notice has been issued for legal proceedings against the company and partners of C.
Mahendra Infojewels in the competent court of law at Mumbai. After the notice Jesingbhai Parikh had
replied for the said notice and at present he is not aware of any further course of action taken by the
erstwhile partner after issue of notice.
Notice for recovery of cheques issued by C. Mahendra Infojewels. (now known as C. Mahendra
Infojewels Limited )
The Partnership firm C. Mahendra Infojewels (now known as C. Mahendra Infojewels Limited ) has
issued cheques to retiring partners against the outstanding capital at the time of retirement. Notice has
been issued to Jesingbhai Parikh being former partner of C. Mahendra Infojewels, Director of C,
Mahendra Infojewels Limited and Director of Minal Industries Limited , by Kanubhai C Shah, a retiring
partner for payment of ` 90,00,000 along with interest @ 12% per annum from 01.07.2010 till payment.
The notice has been issued for legal proceedings against the company and partners of C. Mahendra
Infojewels in the competent court of law at Mumbai. After the notice Jesingbhai Parikh had replied for the
said notice and at present he is not aware of any further course of action taken by the erstwhile partner
after issue of notice.
Notice for recovery of cheques issued by C. Mahendra Infojewels. (now known as C. Mahendra
Infojewels Limited )
The Partnership firm C. Mahendra Infojewels (now known as C. Mahendra Infojewels Limited ) has
issued cheques to retiring partners against the outstanding capital at the time of retirement. Notice has
been issued to Jesingbhai Parikh being former partner of C. Mahendra Infojewels, Director of C,
Mahendra Infojewels Limited and Director of Minal Industries Limited , by Paras C. Mehta, a retiring
partner for payment of ` 40,00,000 along with interest @ 12% per annum from 01.07.2010 till payment.
The notice has been issued for legal proceedings against the company and partners of C. Mahendra
Infojewels in the competent court of law at Mumbai. After the notice Jesingbhai Parikh had replied for the
said notice and at present he is not aware of any further course of action taken by the erstwhile partner
after issue of notice.
Notice for recovery of cheques issued by C. Mahendra Infojewels. (now known as C. Mahendra
Infojewels Limited )
The Partnership firm C. Mahendra Infojewels (now known as C. Mahendra Infojewels Limited ) has
issued cheques to retiring partners against the outstanding capital at the time of retirement. Notice has
been issued to Jesingbhai Parikh being former partner of C. Mahendra Infojewels, Director of C,
Mahendra Infojewels Limited and Director of Minal Industries Limited , by Prakash K.Mehta, a retiring
partner for payment of ` 1,05,00,000 along with interest @ 12% per annum from 01.07.2010 till
payment. The notice has been issued for legal proceedings against the company and partners of C.
Mahendra Infojewels in the competent court of law at Mumbai. After the notice Jesingbhai Parikh had
replied for the said notice and at present he is not aware of any further course of action taken by the
erstwhile partner after issue of notice.
175
Notice for recovery of cheques issued by C. Mahendra Infojewels. (now known as C. Mahendra
Infojewels Limited )
The Partnership firm C. Mahendra Infojewels (now known as C. Mahendra Infojewels Limited ) has
issued cheques to retiring partners against the outstanding capital at the time of retirement. Notice has
been issued to Jesingbhai Parikh being former partner of C. Mahendra Infojewels, Director of C,
Mahendra Infojewels Limited and Director of Minal Industries Limited , by Pravin C Shah, a retiring
partner for payment of ` 96,00,000 along with interest @ 12% per annum from 01.07.2010 till payment.
The notice has been issued for legal proceedings against the company and partners of C. Mahendra
Infojewels in the competent court of law at Mumbai. After the notice Jesingbhai Parikh had replied for the
said notice and at present he is not aware of any further course of action taken by the erstwhile partner
after issue of notice.
Notice for recovery of cheques issued by C. Mahendra Infojewels. (now known as C. Mahendra
Infojewels Limited )
The Partnership firm C. Mahendra Infojewels (now known as C. Mahendra Infojewels Limited ) has
issued cheques to retiring partners against the outstanding capital at the time of retirement. Notice has
been issued to Jesingbhai Parikh being former partner of C. Mahendra Infojewels, Director of C,
Mahendra Infojewels Limited and Director of Minal Industries Limited , by Pravin K.Mehta, a retiring
partner for payment of ` 92,00,000 along with interest @ 12% per annum from 01.07.2010 till payment.
The notice has been issued for legal proceedings against the company and partners of C. Mahendra
Infojewels in the competent court of law at Mumbai. After the notice Jesingbhai Parikh had replied for the
said notice and at present he is not aware of any further course of action taken by the erstwhile partner
after issue of notice.
Notice for recovery of cheques issued by C. Mahendra Infojewels. (now known as C. Mahendra
Infojewels Limited )
The Partnership firm C. Mahendra Infojewels (now known as C. Mahendra Infojewels Limited ) has
issued cheques to retiring partners against the outstanding capital at the time of retirement. Notice has
been issued to Jesingbhai Parikh being former partner of C. Mahendra Infojewels, Director of C,
Mahendra Infojewels Limited and Director of Minal Industries Limited , by Samir P. Shah, a retiring
partner for payment of ` 78,00,000 along with interest @ 12% per annum from 01.07.2010 till payment.
The notice has been issued for legal proceedings against the company and partners of C. Mahendra
Infojewels in the competent court of law at Mumbai. After the notice Jesingbhai Parikh had replied for the
said notice and at present he is not aware of any further course of action taken by the erstwhile partner
after issue of notice.
Notice for recovery of cheques issued by C. Mahendra Infojewels. (now known as C. Mahendra
Infojewels Limited )
The Partnership firm C. Mahendra Infojewels (now known as C. Mahendra Infojewels Limited ) has
issued cheques to retiring partners against the outstanding capital at the time of retirement. Notice has
been issued to Jesingbhai Parikh being former partner of C. Mahendra Infojewels, Director of C,
Mahendra Infojewels Limited and Director of Minal Industries Limited , by Sandeep M.Shah, a retiring
partner for payment of ` 80,00,000 along with interest @ 12% per annum from 01.07.2010 till payment.
The notice has been issued for legal proceedings against the company and partners of C. Mahendra
Infojewels in the competent court of law at Mumbai. After the notice Jesingbhai Parikh had replied for the
said notice and at present he is not aware of any further course of action taken by the erstwhile partner
after issue of notice.
176
Notice for recovery of cheques issued by C. Mahendra Infojewels. (now known as C. Mahendra
Infojewels Limited )
The Partnership firm C. Mahendra Infojewels (now known as C. Mahendra Infojewels Limited ) has
issued cheques to retiring partners against the outstanding capital at the time of retirement. Notice has
been issued to Jesingbhai Parikh being former partner of C. Mahendra Infojewels, Director of C,
Mahendra Infojewels Limited and Director of Minal Industries Limited , by Suresh K.Mehta, a retiring
partner for payment of ` 79,00,000 along with interest @ 12% per annum from 01.07.2010 till payment.
The notice has been issued for legal proceedings against the company and partners of C. Mahendra
Infojewels in the competent court of law at Mumbai. After the notice Jesingbhai Parikh had replied for the
said notice and at present he is not aware of any further course of action taken by the erstwhile partner
after issue of notice.
(iv) Amul Patel
Notice for proceeding U/s 138 read with Section 141 of The Negotiable Instrument Act
The Partnership firm C. Mahendra Infojewels ( now known as C. Mahendra Infojewels Limited ) has
issued cheques to retiring partners against the outstanding capital at the time of retirement. Notices have
been issued on 15th July,2011 by Mr. Mahendra C. shah and Mr. Champak K.Mehta (erstwhile partners
of Partnership Firm of C. Mahendra Infojewels) for dishonored of Cheques amounting to ` 23,35,75,000
issued to Mahendra C. Shah and Amounting to ` 23,35,50,000 to Champak K.Mehta respectively for
proceedings, civil and criminal, including the proceedings u/s 138 read with section 141 of The Negotiable
Instrument Act in the competent court. After the notices the company had replied to both the partners and
at present the company is not aware of any further course of action taken by the erstwhile partners after
issue of notices.
Notice for recovery of cheques issued by C. Mahendra Infojewels. (now known as C. Mahendra
Infojewels Limited )
The Partnership firm C. Mahendra Infojewels (now known as C. Mahendra Infojewels Limited) has issued
cheques to retiring partners against the outstanding capital at the time of retirement. Notice has been
issued by C. Mahendra International Limited, a retiring partner for payment of ` 5, 10, 00,000 along with
interest @ 12% per annum from 01.07.2010 till payment. The notice has been issued for legal
proceedings against the company and partners of C. Mahendra Infojewels in the competent court of law
at Mumbai. The reply for the said notice was given and at present he is not aware of any further course
of action taken by the erstwhile partner after issue of notice.
Notice for recovery of cheques issued by C. Mahendra Infojewels. (now known as C. Mahendra
Infojewels Limited )
The Partnership firm C. Mahendra Infojewels (now known as C. Mahendra Infojewels Limited) has issued
cheques to retiring partners against the outstanding capital at the time of retirement. Notice has been
issued by Champak Kirtilal Mehta, a retiring partner for payment of ` 6,24,00,00,000 along with interest
@ 12% per annum from 01.07.2010 till payment. The notice has been issued for legal proceedings
against the company and partners of C. Mahendra Infojewels in the competent court of law at Mumbai.
The reply for the said notice was given and at present he is not aware of any further course of action
taken by the erstwhile partner after issue of notice.
177
Notice for recovery of cheques issued by C. Mahendra Infojewels. (now known as C. Mahendra
Infojewels Limited )
The Partnership firm C. Mahendra Infojewels (now known as C. Mahendra Infojewels Limited) has issued
cheques to retiring partners against the outstanding capital at the time of retirement. Notice has been
issued by Mahendra C.Shah, a retiring partner for payment of ` 6,42,00,00,000 along with interest @
12% per annum from 01.07.2010 till payment. The notice has been issued for legal proceedings against
the company and partners of C. Mahendra Infojewels in the competent court of law at Mumbai. The reply
for the said notice was given and at present he is not aware of any further course of action taken by the
erstwhile partner after issue of notice.
Notice for recovery of cheques issued by C. Mahendra Infojewels. (now known as C. Mahendra
Infojewels Limited )
The Partnership firm C. Mahendra Infojewels (now known as C. Mahendra Infojewels Limited) has issued
cheques to retiring partners against the outstanding capital at the time of retirement. Notice has been
issued by Kanubhai C Shah, a retiring partner for payment of ` 90, 00,000 along with interest @ 12%
per annum from 01.07.2010 till payment. The notice has been issued for legal proceedings against the
company and partners of C. Mahendra Infojewels in the competent court of law at Mumbai The reply for
the said notice was given and at present he is not aware of any further course of action taken by the
erstwhile partner after issue of notice.
Notice for recovery of cheques issued by C. Mahendra Infojewels. (now known as C. Mahendra
Infojewels Limited )
The Partnership firm C. Mahendra Infojewels (now known as C. Mahendra Infojewels Limited) has issued
cheques to retiring partners against the outstanding capital at the time of retirement. Notice has been
issued by Paras C. Mehta, a retiring partner for payment of ` 40, 00,000 along with interest @ 12% per
annum from 01.07.2010 till payment. The notice has been issued for legal proceedings against the
company and partners of C. Mahendra Infojewels in the competent court of law at Mumbai. The reply for
the said notice was given and at present he is not aware of any further course of action taken by the
erstwhile partner after issue of notice.
Notice for recovery of cheques issued by C. Mahendra Infojewels. (now known as C. Mahendra
Infojewels Limited )
The Partnership firm C. Mahendra Infojewels (now known as C. Mahendra Infojewels Limited) has issued
cheques to retiring partners against the outstanding capital at the time of retirement. Notice has been
issued by Prakash K.Mehta, a retiring partner for payment of ` 1, 05, 00,000 along with interest @ 12%
per annum from 01.07.2010 till payment. The notice has been issued for legal proceedings against the
company and partners of C. Mahendra Infojewels in the competent court of law at Mumbai. The reply for
the said notice was given and at present he is not aware of any further course of action taken by the
erstwhile partner after issue of notice.
Notice for recovery of cheques issued by C. Mahendra Infojewels. (now known as C. Mahendra
Infojewels Limited )
The Partnership firm C. Mahendra Infojewels (now known as C. Mahendra Infojewels Limited) has issued
cheques to retiring partners against the outstanding capital at the time of retirement. Notice has been
issued by Pravin C Shah, a retiring partner for payment of ` 96, 00,000 along with interest @ 12% per
annum from 01.07.2010 till payment. The notice has been issued for legal proceedings against the
178
company and partners of C. Mahendra Infojewels in the competent court of law at Mumbai. The reply for
the said notice was given and at present he is not aware of any further course of action taken by the
erstwhile partner after issue of notice.
Notice for recovery of cheques issued by C. Mahendra Infojewels. (now known as C. Mahendra
Infojewels Limited )
The Partnership firm C. Mahendra Infojewels (now known as C. Mahendra Infojewels Limited) has issued
cheques to retiring partners against the outstanding capital at the time of retirement. Notice has been
issued by Pravin K.Mehta, a retiring partner for payment of ` 92, 00,000 along with interest @ 12% per
annum from 01.07.2010 till payment. The notice has been issued for legal proceedings against the
company and partners of C. Mahendra Infojewels in the competent court of law at Mumbai. The reply for
the said notice was given and at present he is not aware of any further course of action taken by the
erstwhile partner after issue of notice.
Notice for recovery of cheques issued by C. Mahendra Infojewels. (now known as C. Mahendra
Infojewels Limited )
The Partnership firm C. Mahendra Infojewels (now known as C. Mahendra Infojewels Limited) has issued
cheques to retiring partners against the outstanding capital at the time of retirement. Notice has been
issued by Samir P. Shah, a retiring partner for payment of ` 78,00,000 along with interest @ 12% per
annum from 01.07.2010 till payment. The notice has been issued for legal proceedings against the
company and partners of C. Mahendra Infojewels in the competent court of law at Mumbai. The reply for
the said notice was given and at present he is not aware of any further course of action taken by the
erstwhile partner after issue of notice.
Notice for recovery of cheques issued by C. Mahendra Infojewels. (now known as C. Mahendra
Infojewels Limited )
The Partnership firm C. Mahendra Infojewels (now known as C. Mahendra Infojewels Limited) has issued
cheques to retiring partners against the outstanding capital at the time of retirement. Notice has been
issued by Sandeep M.Shah, a retiring partner for payment of ` 80, 00,000 along with interest @ 12% per
annum from 01.07.2010 till payment. The notice has been issued for legal proceedings against the
company and partners of C. Mahendra Infojewels in the competent court of law at Mumbai The reply for
the said notice was given and at present he is not aware of any further course of action taken by the
erstwhile partner after issue of notice.
Notice for recovery of cheques issued by C. Mahendra Infojewels. (now known as C. Mahendra
Infojewels Limited )
The Partnership firm C. Mahendra Infojewels (now known as C. Mahendra Infojewels Limited) has issued
cheques to retiring partners against the outstanding capital at the time of retirement. Notice has been
issued by Suresh K.Mehta, a retiring partner for payment of ` 79, 00,000 along with interest @ 12% per
annum from 01.07.2010 till payment. The notice has been issued for legal proceedings against the
company and partners of C. Mahendra Infojewels in the competent court of law at Mumbai. The reply for
the said notice was given and at present he is not aware of any further course of action taken by the
erstwhile partner after issue of notice.
179
B. Outstanding Litigations by our Promoters/Directors
(i) Shrikant Parikh
(1)Shrikant Parikh had filed the complaint under section 420 of IPC, 1860 against the Directors of Royal
Palms India Pvt. Ltd.( accused) and alleged that the accused have committed cheating under section 420
of IPC in respect of the plot No. 15,16 and 17 at Village Marol Maroshi,Tal. Andheri, Mumbai which have
been taken on lease for collecting higher NA taxes than the actual , plot is not NA land as per the revenue
records and for not compliance of the terms and conditions of lease deed. An order has been passed by
the Metropolitan Magistrate for issue of proceedings under Section 420 of Indian Penal Code. The
accused aggrieved by the order have filed the criminal revision petition challenging the legality, validity
and propriety of the order passed by the Metropolitan Magistrate in the Sessions court in Mumbai. The
criminal revision application is pending.
(2) Shrikant Parikh had filed the complaint against Mr Amir Nensy and others( accused) for giving threat
etc in the matter of leasehold land owned by him at Village Marol Maroshi,Tal. Andheri, Mumbai and
sought direction from the court registering FIR against the accused. The 26th Metropolitan Magistrate
converted the application into private complaint and issued the summons against the accused. The FIR
was registered in Aarey Police Station and the same is now being case pending before 26th Magistrate
court for against the crime such as threat given by the accused.
(3) Shrikant Parikh had filed the FIR in Aaarey Police Station against Mr Amir Nensy and others(
accused) for taking back forcefully the possession of the plot No 15,16 and 17 at Village Marol
Maroshi,Tal. Andheri, Mumbai which he had taken on lease, destructing the compound wall and other
construction and threatening to kill him. The inspecting officer did not find any evidence for the crimes
and the case had been filed in the court of Metropolitan Magistrate for discharge of the case.
(4) Shrikant Parikh along with various companies in which he is director had purchased the plot no
13,15,16,17,22 and 59 on leasehold basis on land bearing survey 169 at Aarey Colony ,Marol Maroshi
Village, Goregaon-E , Mumbai . The lessor though the land being agricultural collecting higher NA taxes
than the actual had filed the Appeal before the court of Dy. Commissioner, Konkan Division for revocation
of NA orders issued for the purpose of development on the plot and land bearing survey No 169 at Aarey
Colony, Marol Maroshi Village, Goregaon-E , Mumbai belong to Royal Palms India Private Limited on
account of non fulfillment of various conditions of NA orders issued y the prescribed Authority. However
the court of Dy. Commissioner, Konkan Division has passed the order on 30.12.2011 for no further issue
of NA order on the said land. Shrikant Parikh aggrieved by the order passed by the court of Dy.
Commissioner , Konkan Division has filed the appeal before Revenue Minister, Government of
Maharashtra for revocation of NA orders issued for the purpose of development on the plot and land
bearing survey No 169 at Aarey Colony ,Marol Maroshi Village, Goregaon-E , Mumbai belong to Royal
Palms India Private Limited .
(5)Shrikant Parikh had filed suit against the Royal Palms India Pvt. Ltd in the court of small cause at
Mumbai for declaring Shrikant Parikh as tenant for Plot no 15,16 and 17 at Village Marol Maroshi,Tal.
Andheri, Mumbai and injunction order from Dispossessing and/ or disturbing the possession of Shrikant
Parikh in the said plot.
180
4.Outstanding Litigations involving our Group Companies
A. Outstanding Litigations against our Group Companies
i. Affinity Investment Private Limited (AIPL)
NIL
ii. C Mahendra Jewels Private Limited(CMJPL)
Assessment year 2000-2001
An income tax appeal dated April 19, 2007, bearing lodging no. 792/07 has been preferred before the
High Court of Bombay by the Commissioner of Income Tax-5 against CMJPL in respect of the
assessment year 2000-01 from an order passed by the ITAT, Mumbai, inter-alia on the following grounds:
(a) The ITAT, Mumbai ought not to have allowed the appeal and should have upheld the CIT order dated
March 2, 2004.
(b) The ITAT, Mumbai while allowing the appeal erred in holding that every loss of revenue as a
consequence of the Assessing Officer‘s order cannot be treated as prejudicial to the interest of the
revenue.
(c) The ITAT, Mumbai should have treated the interest of ` 1,641,583 as Income from Other Sources and
tax CMJPL accordingly as the same is not eligible for exemption under section 10(A) of the Act;
(d) The ITAT, Mumbai out to have followed the ratio set out in a Supreme Court order.
(e) The ITAT, Mumbai ought to have appreciated that the non taxing of the interest income of `
1,641,583 as income from other sources and allowing the same as deduction under section 10(A) of the
Act resulted in under assessment and therefore erroneous and prejudicial and was rightly set aside;
(f) The order of the ITAT, Mumbai is otherwise bad in law and not maintainable in the facts and
circumstances of the case and contrary to the provisions of the Act.
The total amount involved in the aforesaid income tax appeal is valued at ` 1,029,347 and is now pending
for admission before the High Court of judicature at Bombay
iii. Minal Infracons Private Limited (MIPL)
(1) Royal Palms (India) Private limited has filed Civil suit on 18th October,2008 for taking back the
possession of plot No 59 at Village Marol Maroshi,Tal. Andheri, Mumbai which was leased to MIPL In
the court of small causes at Bandra ,Mumbai due to breach of various terms and conditions of lease
deed .The case is pending for hearing.
(2) Royal Palms (India) Private limited has filed suit against MIPL in the Bombay City Civil Court at
Dindoshi, Malad for restraining and temporary injunction from digging, excavating or in any manner
whatsoever from carrying out any construction work in the leasehold property at Plot No 59 at Village
Marol Maroshi,Tal. Andheri, Mumbai which was leased to MIPL. The case is pending in the court.
181
iv. Minal Infrastructure And Property Private Limited (MIPPL)]
NIL
v. Minal life Style Private Limited
NIL
vi. Click Metro Online Private Limited
NIL
vii. Minal Exim Private Limited
NIl
viii. Minal plastic products
NIL
ix. Minal Electrical and Engineering
NIL
x. J B P Enterprise
NIL
xi. Rsbl Jewels
NIL
B. Outstanding Litigations by our Group Companies
i. Affinity Investment Private Limited(AIPL)
1. AIPL had filed the complaint under section 420 of IPC, 1860 against the Directors of Royal
Palms India Pvt. Ltd.( accused) and alleged that the accused have committed cheating under
section 420 of IPC in respect of the plot No. 22 at Village Marol Maroshi,Tal. Andheri, Mumbai
which has been taken on lease for collecting higher NA taxes than the actual plot is not NA land
as per the revenue records and for not compliance of the terms and conditions of lease deed. An
order has been passed by the Metropolitan Magistrate for issue of proceedings under Section
420 of Indian Penal Code. The accuse aggrieved by the order have filed the criminal revision
petition challenging the legality, validity and propriety of the order passed by the Metropolitan
Magistrate in the Sessions court in Mumbai. The criminal revision application is pending.
2. AIPL had filed suit against the Royal Palms India Pvt. Ltd in the court of small cause at Mumbai
for declaring AIPL as tenant for Plot no 22 at Village Marol Maroshi, Tal. Andheri, Mumbai and
injunction order from Dispossessing and/ or disturbing the possession ofAIPL in the said plot.
ii. Minal Infracons Private Limited(MIPL)
1. MIPL had filed the complaint under section 420 of IPC, 1860 against the Directors of Royal
Palms India Pvt. Ltd.( accused) and alleged that the accused have committed cheating under
section 420 of IPC in respect of the plot No. 59 at Village Marol Maroshi,Tal. Andheri, Mumbai
182
which had been taken on lease for collecting higher NA taxes than the actual, plot is not NA land
as per the revenue records and for not compliance of the terms and conditions of lease deed. An
order has been passed by the Metropolitan Magistrate for issue of proceedings under Section
420 of Indian Penal Code. The accuse aggrieved by the order have filed the criminal revision
petition challenging the legality, validity and propriety of the order passed by the Metropolitan
Magistrate in the Sessions court in Mumbai. The criminal revision application is pending.
2. MIPL had filed suit against the Royal Palms India Pvt. Ltd in the court of small cause at Mumbai
for declaring MIPL as tenant for Plot no 59 at Village Marol Maroshi, Tal. Andheri, Mumbai and
injunction order from Dispossessing and/ or disturbing the possession of MIPL in the said plot.
iii. Minal Infrastructure And Property Private Limited (MIPPL)
1. MIPPL had filed the complaint under section 420 of IPC, 1860 against the Directors of Royal
Palms India Pvt. Ltd.( accused) and alleged that the accused have committed cheating under
section 420 of IPC in respect of the plot No. 13 at Village Marol Maroshi,Tal. Andheri, Mumbai
which had been taken on lease for collecting higher NA taxes than the actual, plot is not NA land
as per the revenue records and for not compliance of the terms and conditions of lease deed. An
order has been passed by the Metropolitan Magistrate for issue of proceedings under Section
420 of Indian Penal Code. The accuse aggrieved by the order have filed the criminal revision
petition challenging the legality, validity and propriety of the order passed by the Metropolitan
Magistrate in the Sessions court in Mumbai. The criminal revision application is pending.
2. MIPPL had filed suit against the Royal Palms India Pvt. Ltd in the court of small cause at Mumbai
for declaring MIPPL as tenant for Plot no 13 at Village Marol Maroshi, Tal. Andheri, Mumbai and
injunction order from Dispossessing and/ or disturbing the possession of MIPPL in the said plot.
IV. Click Metro Online Private Limited
NIL
V. C Mahendra Jewels Private Limited
NIL
VI. Minal Exim Private Limited
NIL
VII. Minal life Style Private Limited
NIL
VIII. Minal Plastic Products
NIL
IX. Minal Electrical and Engineering
NIL
183
X. J B P Enterprise
NIL
XI. RSBL Jewels
NIL
5. Outstanding dues to small scale undertaking(s) or any other creditors
There are no outstanding dues to small scale undertaking(s) or any other creditors by our Company, for
more than 30 days.
6. Material Developments since the Last Balance Sheet Date
Except as disclosed in the chapter titled “Management’s Discussion and Analysis of Financial
Condition” beginning on page 155 in the opinion of our Company’s Board, there have not arisen, since
the date of the last financial statements disclosed in the Draft Red Herring Prospectus, any circumstances
that materially or adversely affect or are likely to affect our profitability taken as a whole or the value of
our consolidated assets or our ability to pay material liabilities within the next 12 months.
184
GOVERNMENT AND OTHER STATUTORY DISCLOSURES
The Company has received the necessary consents, licenses, permissions and approvals from the
Government and various governmental agencies required for its present business and except as
mentioned below, no further approvals are required for carrying on the Company’s present as well as
proposed business activities of the company except as mentioned below. It must, however, be distinctly
understood that in granting the below mentioned approvals, the Central and State Government, and other
authorities do not take any responsibility for the financial soundness of the Company or for the
correctness of any of the statements or any commitments made or opinions expressed.
In view of the approvals listed below, the Company can undertake this Issue and its current business
activities and no further major approvals from any governmental or regulatory authority or any other entity
are required to undertake the Issue or continue its business activities. Certain approvals have elapsed in
their normal course and the Company has either made an application to the appropriate authorities for
renewal of such licenses and/or approvals or is in the process of making such applications.
The main objects clause of the Memorandum of Association and objects incidental to the main objects
enable our company to undertake its existing activities.
APPROVALS FOR THE ISSUE
The following approvals have been obtained or will be obtained in connection with the Issue:
The Board of Directors has, pursuant to resolution passed at its meeting held on January 19th, 2012,
authorized the Issue and related matters subject to the approval by the shareholders of our Company
under section 81(1A) of the Companies Act, and such other authorities as may be necessary.
The shareholders of our Company have authorised this Fresh Issue by their extra-ordinary resolution
passed pursuant to Section 81(1A) of the Companies Act, at its EGM held on February 14th 2012 and
authorized the Board to take decisions in relation to this Issue.
Our Company has obtained in-principal listing approvals dated [] from BSE and [x] from NSE
INCORPORATION DETAILS
C Mahendra Infojewels Ltd was incorporated under Part IX of the Companies Act, 1956 (No.1 of 1956) by
Registrar of Companies, Gujarat on 10.08.2010. The Corporate Identification Number issued is
U36912GJ2010PLC061930.
APPROVALS FOR THE BUSINESS
We require various approvals to carry on our business in India. We have received the following approvals
In relation to our business.
Existing Unit I 1. Certificate of Incorporation issued to our Company, bearing the name - C. Mahendra InfoJewels
Limited, dated August 10th, 2010 bearing CIN: U36912GJ2010PLC061930, issued by the Registrar of
Companies, Gujarat.
2. Our Company’s PAN (Permanent Account Number) is AACFC0011B.
3. License from Municpal Corporation of Greater Mumbai having license no 761090828 with a validity
period from 01.10.20011 to 30.09.2012.
185
4. VAT Registration (TIN) no. 27520791570V with effect from dated Septmeber 15th, 2010 issued by
Sales Tax Department, Maharashtra under the Maharashtra Value Added Tax Act, 2002.
5. Central Sales Tax Registration (CST-TIN) no. 27520791570C dated Septmeber 15th, 2010 issued by
Central Sales Tax Department, Maharashtra under the Central Sales Tax Act, 1956.
6. Registration of Tax deduction account No. MUMC17805E (TAN) dated September 24th, 2010 issued
by Income Tax Department for office situated at Plot No. 16 (P) 17, 28- 29(P), MIDC, SEEPZ Andheri
(E), Mumbai – 400096 and valid upto cancellation.
7. Approval from Government of India, for the continuation of SEZ project by the Office of the
Development Commissioner, SEEPZ Special Economic Zone, Ministry of Commerce & Industry for
establishment of manufacturing unit at Part of Plot No 16(p), 17, 28 & 29(p) for manufacturing of
Gold & Silver Studded Jewellery vide letter no. SEEPZ/NUS/APL/GJ/245/99/4042 dated 16.04.2010
for a period of five years of i.e 2010-11 to 2014-15, w.e.f 1.4.2010.
8. Letter of Intimation to the Development Commissioner, SEEPZ, SEZ Andheri East, Mumbai – 400096
for commencing Commercial Production / implementation of the project from 11.10.2010.
9. Factory License No. 092692 dated 4.05.2011 issued to our company by The Industrial Health &
Safety Department, Maharashtra. The said license is valid upto 31/12/2012.
10. Approval from Government of India, of SEZ project by the Office of the Development Commissioner,
SEEPZ Special Economic Zone, Ministry of Commerce & Industry for establishment of manufacturing
unit (Unit-II) at Part of Plot No 16(p), 17, 28 & 29(p) for manufacturing of Gold & Silver Studded
Jewellery vide letter no. SEEPZ SEZ/IA-I/APL/GJ-08/09-10/7512 dated 20.07.2009 for a period of five
years.
11. Establishment Code No. 35-102-56 under the Employees State Insurance Corporation Act, 1948,
issued by the Regional Director, Maharashtra, ESIC, made to be effective from 05.05.2000 by the
letter, bearing number B/COV./RM-354(35-102-56).
12. Certificate of Registration No. MH/PF/APP/44556/ENF-VI/06G/470 dated 18.7.2000 issued to our
company by Office of the Regional Provident Fund Commissioner, Regional Provident Fund
Commissioner, Regional Office, Maharashtra and Goa and the same is valid upto cancellation.
13. Certificate of Importer-Exporter Code No. 2799000274, allotted to our Company by Government of
India, Office of the Development Commissioner, SEEPZ Special Economic Zone, Ministry of
Commerce & Industry, Mumbai on March 23rd, 2000 and is valid till cancellation. This Certificate has
been issued vide letter bearing SEEPZ-SEZ/NUS/APL/GJ/245/99/10318 on 23rd September, 2010.
LICENSE AND APPROVALS APPLIED FOR BUT YET TO BE RENEWED/RECEIVED
Application for Consent / Authorisation to Maharashtra Pollution Control Board under section 25 and 26 of
the Water (Prevention & Control of Pollution) Act, 1974, under section 21 of the Air (Prevention & Control
of Pollution) Act, 1981, and Authorization/Renewal of Authorization under Rule 5 of the Hazardous
Wastes (Management & Handling) Rules 1989. The same is pending for approval.
SURAT SEZ
Approval from Government of India, Office of the Development Commissioner, Surat Special Economic
Zone, Ministry of Commerce & Industry for establishment of new unit at Unit No 427, on Plot No 250,
Surat Special Economic Zone, Sachin, Surat vide letter no SSEZ/II/23/2010-11/800 dated 30.08.2010.
The said approval is valid for a period of five years.
License required for Objects of the Issue:
186
Proposed Unit
-
Application made to the Development Commissioner, SEEPZ, SEZ, Andheri East Mumbai for
Setting Up Precious Metal Refinery at Plot No. 16 (P)- 17 – 28 & 29 (P) SEEPZ, SEZ (MIDC),
Andheri East Mumbai - 400096
-
Our Company is yet to apply for Consent / Authorisation to Maharashtra Pollution Control Board
under section 25 and 26 of the Water (Prevention & Control of Pollution) Act, 1974, under section
21 of the Air (Prevention & Control of Pollution) Act, 1981, and Authorization/Renewal of
Authorization under Rule 5 of the Hazardous Wastes (Management & Handling) Rules 1989.
As on date Other than those mentioned above, further no licenses required, which our Company is to
apply for, in order to run business.
187
OTHER REGULATORY AND STATUTORY DISCLOSURES
Authority for the Issue
The fresh issue of 1,30,00,000 equity shares in terms of this Draft Red Prospectus has been authorised
by a resolution of our Board dated 19th January, 2012 and by a special resolution passed pursuant to
Section 81(1A) of the Companies Act, 1956 at the EGM by the shareholders of our Company held on 14th
February 2012.
Prohibition by SEBI and RBI
Our Company, our Directors, our Promoters, the group companies, companies promoted by or Promoters
and companies or entities with which our Company’s Directors are associated as directors / Promoters /
partners have not been prohibited from accessing or operating in the capital markets or restrained from
buying, selling or dealing in securities under any order or direction passed by SEBI. The listing of any
securities of our Company has never been refused at anytime by any of the Stock Exchanges in India.
Our Company, our Promoters, their relatives, group companies and associate companies has, not been
detained as willful defaulters by RBI/government authorities and there are no violations of securities laws
committed by them in the past or pending against them.
Eligibility for the Issue
The Company is eligible for the Issue in accordance with Regulation 26(1) of the SEBI ICDR Regulations
as explained under, with the eligibility criteria calculated in accordance with Restated Financial
Statements:
x
The Company has net tangible assets of at least ` 3 Crores in each of the preceding 3 full years
(of 12 months each), of which not more than 50% is held in monetary assets;
x
The Company has a track record of distributable profits in terms of section 205 of the Companies
Act, 1956, for at least (3) out of immediately preceding five (5) years;
x
The Company has a net worth of at least ` 1 Crores in each of the preceding three (3) full years
(of 12 months each);
x
The aggregate of the proposed issue and all previous issues made in the same financial year in
terms of size does not exceed five (5) times its pre-issue net worth as per the last available
audited accounts.
The pre-issue net worth, distributable profits and net tangible assets in terms of section 205 of the
Companies Act, of the Company for the last 5 completed years are as under:
(` In Crores)
For the Financial September March
March 31st March 31st March 31st March 31st
year Ending
30th 2011
31st 2011
2010
2009
2008
2007
Net Tangible Assets
43.61
34.04
25.00
64.52
19.55
76.73
Monetary Assets
0.41
0.47
0.39
0.21
0.06
0.43
%
of
Monetary
0.94
1.38
1.56
0.33
0.31
0.56
Assets
to
Net
Tangible
Assets
Distributable Profits
9.59
9.04
(0.13)
2.08
14.11
(3.11)
Net worth
43.61
34.04
25.00
64.52
19.55
76.73
188
The proposed issue size would not exceed five times the pre-issue Tangible net worth as on March31,
2011 which is ` 34.04 Cores. Based on the above data we hereby certified that the Company is fulfilling
the criteria of eligibility norms for Public Issue by unlisted company as specified in the regulation 26(1) of
SEBI (ICDR) Regulations, 2009 and amendments thereof.
Monetary Assets represents Cash and Bank Balance. Net tangible assets shall mean the sum of all net
assets of the company, excluding intangible assets, as defined in Accounting Standard 26 (AS 26) issued
by the Institute of Chartered Accountants of India.
Further, in accordance with Regulation 26 (4) of the SEBI ICDR Regulations, we undertake that the
number of allottees, i.e., persons receiving allotment in the Issue shall be at least 1,000; otherwise, the
entire application money will be refunded forthwith. In case of delay, if any, in refund, our Company shall
pay interest on the application money at the rate of 15% per annum for the period of delay.
DISCLAIMER CLAUSE
AS REQUIRED, A COPY OF THIS PROSPECTUS HAS BEEN SUBMITTED TO SEBI.
“IT IS TO BE DISTINCTLY UNDERSTOOD THAT SUBMISSION OF THIS PROSPECTUS TO
SECURITIES AND EXCHANGE BOARD OF INDIA (SEBI) SHOULD NOT, IN ANY WAY, BE DEEMED
OR CONSTRUED THAT THE SAME HAS BEEN CLEARED OR APPROVED BY SEBI. SEBI DOES
NOT TAKE ANY RESPONSIBILITY EITHER FOR THE FINANCIAL SOUNDNESS OF ANY SCHEME
OR THE PROJECT FOR WHICH THE ISSUE IS PROPOSED TO BE MADE OR FOR THE
CORRECTNESS OF THE STATEMENTS MADE OR OPINIONS EXPRESSED IN THIS OFFER
DOCUMENT. THE BOOK RUNNING LEAD MANAGER, CORPORATE STRATEGIC ALLIANZ
LIMITED HAS CERTIFIED THAT THE DISCLOSURES MADE IN THIS PROSPECTUS ARE
GENERALLY ADEQUATE AND ARE IN CONFORMITY WITH SEBI (ISSUE OF CAPITAL AND
DISCLOSURE REQUIREMENT) REGULARIONS, 2009 IN FORCE FOR THE TIME BEING. THIS
REQUIREMENT IS TO FACILITATE INVESTORS TO TAKE AN INFORMED DECISION FOR MAKING
AN INVESTMENT IN THE PROPOSED ISSUE.
IT SHOULD ALSO BE CLEARLY UNDERSTOOD THAT WHILE OUR COMPANY IS PRIMARILY
RESPONSIBLE FOR THE CORRECTNESS, ADEQUACY AND DISCLOSURE OF ALL RELEVANT
INFORMATION IN THIS OFFER DOCUMENT, THE BOOK RUNNING LEAD MANAGER IS EXPECTED
TO EXERCISE DUE DILIGENCE TO ENSURE THAT OUR COMPANY DISCHARGES ITS
RESPONSIBILITY ADEQUATELY IN THIS BEHALF AND TOWARDS THIS PURPOSE, THE BOOK
RUNNING LEAD MANAGER, CORPORATE STRATEGIC ALLIANZ LIMITED HAVE FURNISHED TO
SEBI, A DUE DILIGENCE CERTIFICATE DATED 19th MARCH, 2012 IN ACCORDANCE WITH THE
SEBI (MERCHANT BANKERS) REGULATIONS, 1992, WHICH READS AS FOLLOWS:
WE THE UNDER NOTED LEAD MERCHANT
FORTHCOMING ISSUE STATE AS FOLLOWS:
BANKER
TO
THE
ABOVE
MENTIONED
1. WE HAVE EXAMINED VARIOUS DOCUMENTS INCLUDING THOSE RELATING TO LITIGATION
LIKE COMMERCIAL DISPUTES, PATENT DISPUTES, DISPUTES WITH COLLABORATORS
ETC. AND OTHER MATERIALS MORE PARTICULARLY REFERRED TO IN THE ANNEXURE
HERETO IN CONNECTION WITH THE FINALISATION OF THE DRAFT RED HERRING
PROSPECTUS/DRAFT PROSPECTUS/LETTER OF OFFER PERTAINING TO THE SAID ISSUE;
2. ON THE BASIS OF SUCH EXAMINATION AND THE DISCUSSIONS WITH THE ISSUER, ITS
DIRECTORS AND OTHER OFFICERS, OTHER AGENCIES, INDEPENDENT VERIFICATION OF
THE STATEMENTS CONCERNING THE OBJECTS OF THE ISSUE, PRICE JUSTIFICATION
AND THE CONTENTS OF THE DOCUMENTS MENTIONED IN THE ANNEXURE AND OTHER
PAPERS FURNISHED BY THE COMPANY, WE CONFIRM THAT:
189
a. THE DRAFT RED HERRING PROSPECTUS FILED WITH THE BOARD IS IN CONFORMITY
WITH THE DOCUMENTS, MATERIALS AND PAPERS RELEVANT TO THE ISSUE;
b. ALL THE LEGAL REQUIREMENTS RELATING TO THE ISSUE AS ALSO THE
REGULATIONS, GUIDELINES, INSTRUCTIONS, ETC. FRAMED/ISSUED BY THE BOARD,
THE CENTRAL GOVERNMENT AND ANY OTHER COMPETENT AUTHORITY IN THIS
BEHALF HAVE BEEN DULY COMPLIED WITH; AND
c. THE DISCLOSURES MADE IN THE DRAFT RED HERRING PROSPECTUS ARE TRUE, FAIR
AND ADEQUATE TO ENABLE THE
INVESTORS TO MAKE A WELL INFORMED DECISION AS TO THE INVESTMENT IN THE
PROPOSED ISSUE AND SUCH DISCLOSURES ARE IN ACCORDANCE WITH THE
REQUIREMENTS OF THE COMPANIES ACT, 1956, THE SEBI (ISSUE OF CAPITAL AND
DISCLOSURE REQUIREMENT) REGULATIONS, 2009 AND OTHER APPLICABLE LEGAL
REQUIREMENTS
3. WE CONFIRM THAT BESIDES OURSELVES, ALL THE INTERMEDIARIES NAMED IN THE
DRAFT RED HERRING PROSPECTUS ARE REGISTERED WITH THE BOARD AND THAT TILL
DATE SUCH REGISTRATION IS VALID;
4. WE SHALL SATISFY OURSELVES ABOUT THE WORTH OF THE UNDERWRITERS TO FULFIL
THEIR UNDERWRITING COMMITMENTS. –NOTED FOR COMPLIANCE
5. WE CERTIFY THAT WRITTEN CONSENT FROM THE PROMOTERS HAS BEEN OBTAINED
FOR INCLUSION OF THEIR SPECIFIED SECURITIES AS PART OF PROMOTERS’
CONTRIBUTION SUBJECT TO LOCK-IN AND THE SPECIFIED SECURITIES PROPOSED TO
FORM PART OF THE PROMOTERS’ CONTRIBUTION SUBJECT TO LOCK-IN, WILL NOT BE
DISPOSED/SOLD/TRANSFERRED BY THE PROMOTERS DURING THE PERIOD STARTING
FROM THE DATE OF FILING THE DRAFT RED HERRING PROSPECTUS WITH THE BOARD
TILL THE DATE OF COMMENCEMENT OF LOCK-IN PERIOD AS STATED IN THE DRAFT RED
HERRING PROSPECTUS.
6. WE CERTIFY THAT REGULATION 33 OF THE SECURITIES AND EXCHANGE BOATRD OF
INDIA (ISSUE OF CAPITAL AND DISCLOSURE REQUIREMENTS) REGULATIONS 2009,
WHICH RELATES TO SECURITIES INELIGIBLE FOR COMPUTATION OF PROMOTERS
CONTRIBUTION, HAS BEEN DULY COMPLIED WITH AND APPROPRIATE DISCLOSURES AS
TO COMPLIANCE WITH THE CLAUSE HAVE BEEN MADE IN THE DRAFT RED HERRING
PROSPECTUS.
7. WE UNDERTAKE THAT SUB-REGULATION (4) OF REGULATIONS 32 AND CLAUSE (c) AND
(d) OF SUB-REGULATION (2) OF REGULATION 8 OF THE SECURITIES AND EXCHANGE
BOARD OF INDIA (ISSUE OF CAPITAL AND DISCLOSURE REQUIREMENTS) REGULATION
2009 SHALL BE COMPIED WITH. WE CONFIRM THAT ARRANGEMENTS HAVE BEEN MADE
TO ENSURE THAT ALL PROMOTER’S CONTRIBUTION SHALL BE RECEIVED AT LEAST ONE
DAY BEFORE THE OPENING OF THE ISSUE. WE UNDERTAKE THAT THE AUDITORS’
CERTIFICATE TO THIS EFFECT SHALL BE DULY SUBMITTED TO THE BOARD. WE FURTHER
CONFIRM THAT ARRANGEMENTS HAVE BEEN MADE TO ENSURE THAT PROMOTER’S
CONTRIBUTION SHALL BE KEPT IN AN ESCROW ACCOUNT WITH A SCHEDULED
COMMERCIAL BANK AND SHALL BE RELEASED TO THE ISSUER ALONG WITH THE
PROCEEDS OF THE PUBLIC ISSUE. - NOT APPLICABLE
8. WE CERTIFY THAT THE PROPOSED ACTIVITIES OF THE ISSUER FOR WHICH THE FUNDS
ARE BEING RAISED IN THE PRESENT ISSUE FALL WITHIN THE ‘MAIN OBJECTS’ LISTED IN
190
THE OBJECT CLAUSE OF THE MEMORANDUM OF ASSOCIATION OR OTHER CHARTER OF
THE ISSUER AND THAT THE ACTIVITIES WHICH HAVE BEEN CARRIED OUT UNTIL NOW
ARE VALID IN TERMS OF THE OBJECT CLAUSE OF ITS MEMORANDUM OF ASSOCIATION.
9. WE CONFIRM THAT NECESSARY ARRANGEMENTS HAVE BEEN MADE TO ENSURE THAT
THE MONEYS RECEIVED PURSUANT TO THE ISSUE ARE KEPT IN A SEPARATE BANK
ACCOUNT AS PER THE PROVISIONS OF SUB-SECTION 3 OF SECTION 73 OF THE
COMPANIES ACT, 1956 AND THAT SUCH MONEYS SHALL BE RELEASED BY THE SAID
BANK ONLY AFTER PERMISSION IS OBTAINED FROM ALL THE STOCK EXCHANGES
MENTIONED IN THE RED HERRING PROSPECTUS. WE FURTHER CONFIRM THAT THE
AGREEMENT TO BE ENTERED INTO BETWEEN THE BANKERS TO THE ISSUE AND THE
ISSUER SPECIFICALLY WILL CONTAIN THIS CONDITION. – NOTED FOR COMPLIANCE
10. WE CERTIFY THAT A DISCLOSURE HAS BEEN MADE IN THE DRAFT RED HERRING
PROSPECTUS, THAT THE INVESTOR SHALL BE GIVEN AN OPTION TO GET THE SHARES IN
DEMAT OR PHYSICAL MODE – NOT APPLICABLE AS THE ISSUE SIZE IS MORE THAN ` 10
CRORES, HENCE UNDER SECTION 68B OF THE COMPANIES ACT, 1956, THE EQUITY
SHARES ARE TO BE ISSUED IN DEMAT ONLY. - NOT APPLICABLE
11. WE CERTIFY THAT ALL THE APPLICABLE DISCLOSURES MANDATED IN THE
SECURITIES AND EXCHANGE BOARD OF INDIA (ISSUE OF CAPITAL AND DISCLOSURE
REQUIREMENTS) REGULATIONS, 2009 HAVE BEEN MADE IN ADDITION TO DISCLOSURES
WHICH, IN OUR VIEW, ARE FAIR AND ADEQUATE TO ENABLE THE INVESTOR TO MAKE A
WELL INFORMED DECISION.
12. WE CERTIFY THAT THE FOLLOWING DISCLOSURES HAVE BEEN MADE IN THE DRAFT
RED HERRING PROSPECTUS:
a. AN UNDERTAKING FROM THE ISSUER THAT AT ANY GIVEN TIME, THERE SHALL BE
ONLY ONE DENOMINATION FOR THE EQUITY SHARES OF THE ISSUER AND
b. AN UNDERTAKING FROM THE ISSUER THAT IT SHALL COMPLY WITH SUCH
DISCLOSURE AND ACCOUNTING NORMS SPECIFIED BY THE BOARD FROM TIME TO TIME.
13. WE UNDERTAKE TO COMPLY WITH THE REGULATIONS PERTAINING TO ADVERTISEMENT
IN TERMS OF THE SECURITIES AND EXCHANGE BOARD OF INDIA (ISSUE OF CAPITAL
AND DISCLOSURE REQUIREMENTS) REGULATIONS, 2009 WHILE MAKING THE ISSUE.
14. WE ENCLOSE A NOTE EXPLAINING HOW THE PROCESS OF DUE DILIGENCE HAS BEEN
EXERCISED BY US IN VIEW OF THE NATURE OF CURRENT BUSINESS BACKGROUND OR
THE ISSUER, SITUATION AT WHICH THE PROPOSED BUSINESS STANDS, THE RISK
FACTORS, PROMOTERS EXPERIENCE ,ETC.
15. WE ENCLOSE A CHECKLIST CONFIRMING REGULATION-WISE COMPLIANCE WITH THE
APPLICABLE PROVISIONS OF THE SECURITIES AND EXCHANGE BOARD OF INDIA (ISSUE
OF CAPITAL AND DISCLOSURE REQUIREMENTS) REGULATIONS, 2009, CONTAINING
DETAILS SUCH AS THE REGULATION NUMBER, ITS TEXT, THE STATUS OF COMPLIANCE,
PAGE NUMBER OF THE DRAFT RED HERRING PROSPECTUS WHERE THE REGULATION
HAS BEEN COMPLIED WITH AND OUR COMMENTS, IF ANY.”
WE UNDERTAKE TO DISCLOSE THE TRACK RECORD OF THE PERFORMANCE OF EACH PUBLIC
ISSUE MANAGED BY CORPORATE STRATEGIC ALLIANZ LIMITED FOR A PERIOD OF THREE
FINANCIAL YEARS FROM THE DATE OF LISTING ON ITS WEBSITE WWW.CSAPL.COM; AS PER
FORMAT SPECIFIED BY THE BOARD THROUGH CIRCULAR REFERENCE CIR/MIRSD/1/2012
DATED JANUARY 10, 2012
191
THE FILING OF THE DRAFT RED HERRING PROSPECTUS DOES NOT, HOWEVER, ABSOLVE THE
ISSUER FROM ANY LIABILITIES UNDER SECTION 63 AND SECTION 68 OF THE COMPANIES ACT,
1956 OR FROM THE REQUIREMENT OF OBTAINING SUCH STATUTORY OR OTHER
CLEARANCES AS MAY BE REQUIRED FOR THE PURPOSE OF THE PROPOSED ISSUE. SEBI
FURTHER RESERVES THE RIGHT TO TAKE UP, AT ANY POINT OF TIME, WITH THE BRLM, ANY
IRREGULARITIES OR LAPSES IN THE DRAFT RED HERRING PROSPECTUS.
ALL LEGAL REQUIREMENTS PERTAINING TO THE ISSUE WILL BE COMPLIED WITH AT THE
TIME OF FILING OF THE RED HERRING PROSPECTUS WITH THE REGISTRAR OF COMPANIES,
GUJARAT IN TERMS OF 60B OF THE COMPANIES ACT. ALL LEGAL REQUIREMENTS
PERTAINING TO THE ISSUE WILL BE COMPLIED WITH AT THE TIME OF REGISTRATION OF THE
PROSPECTUS WITH THE REGISTRAR OF COMPANIES, GUJARAT IN TERMS OF SECTION 56,
SECTION 60 AND SECTION 60B OF THE COMPANIES ACT.
Disclaimer from the Issuer and the Book Running Lead Manager
Investors may note that C. Mahendra InfoJewels Limited and Corporate Strategic Allianz Limited accept
no responsibility for statements made otherwise than in the Prospectus or in the advertisement or any
other material issued by or at the instance of the Issuer and that any one, placing reliance on any other
source of information would be doing so at his own risk.
All information will be made available by the Book Running Lead Manager, Underwriters, Syndicate
members and our Company to the public and investors at large and no selective or additional information
would be available for any section of the investors in any manner whatsoever including at road shows,
presentations, in research or sales reports etc. We shall not be liable to the Bidders for any failure in
uploading the Bids due to faults in any software/hardware system or otherwise.
The BRLM accepts no responsibility; save to the limited extent as provided in the Memorandum of
Understanding entered into between the BRLM and our Company and the Underwriting Agreement to be
entered into between the Underwriters and our Company.
Caution
Neither our Company nor the Book Running Lead Manager or any other member of the Syndicate is
liable to the Bidders for any failure in downloading the Bids due to faults in any software/hardware system
or otherwise.
The BRLM and its associates and affiliates may engage in transactions with, and perform services for,
our Company and Promoter Group Entities, affiliates or associates of our Company in the ordinary course
of business and have engaged, and may in future engage, in the provision of financial services for which
they have received, and may in future receive, compensation.
Price Information and the track record of the past Issues handled by the Book Running Lead
Manager
For details regarding the price information and the track record of the past Issues handaled by the Book
Running Lead Manager to the Issue as specified in Circular reference CIR/MIRSD/1/2012 dated January
10, 2012 issued by the SEBI, please refer to ‘Annexure A’ to the Draft Red Herring Prospectus and the
website of the Book Running Lead Manager at www.csapl.com
FORMAT FOR DISCLOSURE OF PRICE INFORMATION OF PAST ISSUES HANDLED BY
CORPORATE STRATEGIC ALLIANZ LIMITED
TABLE 1
192
S
r
Issue
Name
Iss
ue
Siz
e
Rs.
(Cr
.)
Iss
ue
Pri
ce
(Rs
.)
Listi
ng
Date
Ope
ning
Pric
e on
Listi
ng
Date
Clos
ing
Pric
e on
Listi
ng
Dat
e
%
Chang
e in
Price
on
listing
date
(Closi
ng vs.
Issue
Price)
Bench
mark
Index
on
Listing
Date
(Closi
ng)
(BSE)
Closi
ng
Price
as on
10th
Calen
dar
Day
from
Listin
g Day
1
Indo
Thai
Securit
ies Ltd.
Rushil
Decor
Ltd.
29.
6
74
Nov
02,
2011
75
23
(68.91
)
17464
.85
16.95
40.
63
5
72
July
07,
2011
81.2
5
119.
65
66.25
19078
.3
Timbor
Home
Ltd.
23.
24
7
63
June
22,
2011
72
91.2
44.76
17550
.63
2
3
Bench
mark
Index
as on
10th
Calend
ar Day
from
Listing
Day
(Closin
g)
17192.
82
Closi
ng
Price
as on
20th
Calen
dar
Day
from
Listin
g Day
Bench
mark
Index
as on
20th
Calend
ar Day
from
Listing
Day
(Closin
g)
16065.
42
Closi
ng
Price
as on
30th
Calen
dar
Day
from
Listin
g Day
136.5
18561.
92
130.6
5
18432.
25
107.6
5
17305.
87
61.70
18762.
80
42.90
18411.
62
42.05
18722.
3
12.15
11.37
Bench
mark
Index
as on
30th
Calend
ar Day
from
Listing
Day
(Closin
g)
16846.
83
TABLE 2: SUMMARY STATEMENT OF DISCLOSURE
Financi
alYear
Tot
al
No.
of
IPO
s
Total
Fund
s
Raise
d Rs.
(Cr.)
Nos. of IPO trading
at discount on listing
date
Nos. of IPO trading
at premium on
listing date
Nos. of IPO trading
at discount as on
30th calendar day
from listing date
Nos. of IPO trading
at premium as on
30th calendar day
from listing date
Ove
r
50
%
Betwe
en 2550%
Les
s
tha
n
25
%
Ove
r
50
%
Betwe
en 2550%
Les
s
tha
n
25
%
Over
50%
Betwe
en 2550%
Les
s
tha
n
25
%
Ove
r
50
%
Betwe
en 2550%
Les
s
tha
n
25
%
20102011
3
93.48
2
1
NIL
NIL
1
1
NIL
1
1
NIL
NIL
1
NIL
20092010
NIL
NIL
NIL
NIL
NIL
NIL
NIL
NIL
NIL
NIL
NIL
NIL
NIL
NIL
20082009
NIL
NIL
NIL
NIL
NIL
NIL
NIL
NIL
NIL
NIL
NIL
NIL
NIL
NIL
193
Note:
a) In case the 10th, 20th and 30th calendar day from the date of listing fall on a holiday, the closing share
price of the immediately preceding day has been taken into consideration.
b) BSE Sensex has been considered as Benchmark Index.
Disclaimer in respect of Jurisdiction
This Issue is being made in India to persons resident in India (including Indian nationals resident in India
who are majors, HUFs, companies, corporate bodies and societies registered under the applicable laws
in India and authorized to invest in shares, Indian mutual funds registered with SEBI, Indian financial
institutions, commercial banks, regional rural banks, co-operative banks (subject to RBI permission),
trusts registered under the Societies Registration Act, 1860, as amended from time to time, or any other
trust law and who are authorized under their constitution to hold and invest in shares) and to NRIs, FIIs
and Foreign Venture Capital Funds Registered with SEBI. The Draft Red Herring Prospectus does not,
however, constitute an invitation to subscribe to shares issued hereby in any other jurisdiction to any
person to whom it is unlawful to make an Issue or invitation in such jurisdiction. Any person into whose
possession the Draft Red Herring Prospectus comes is required to inform himself or herself about, and to
observe any such restrictions. Any dispute arising out of this Issue will be subject to the jurisdiction of
appropriate court(s) only.
No action has been or will be taken to permit a public offering in any jurisdiction where action would be
required for that purpose, except that the Draft Red Herring Prospectus was submitted to SEBI for its
observations and SEBI has given its observation. Accordingly, the Equity Shares represented thereby
may not be offered or sold, directly or indirectly, and the Draft Red Herring Prospectus may not be
distributed, in any jurisdiction, except in accordance with the legal requirements applicable in such
jurisdiction. Neither the delivery of the Draft Red Herring Prospectus shall under any circumstances
create any implication that there has been no change in the affairs of our Company since the date hereof
or that the information contained herein is correct as of any time subsequent to this date.
Disclaimer Clause of the Bombay Stock Exchange Limited
Bombay Stock Exchange Limited (“the Exchange”) has vide its letter dated ____, given permission to this
Company to use the Exchange's name in this offer document as one of the Stock Exchanges on which
this Company’s securities are proposed to be listed. The Exchange has scrutinized this offer document
for its limited internal purpose of deciding on the matter of granting the aforesaid permission to this
Company. The Exchange does not in any manner:
i.
ii.
iii.
warrant, certify or endorse the correctness or completeness of any of the contents of this
offer document; or
warrant that this Company’s securities will be listed or will continue to be listed on the BSE;
or
take any responsibility for the financial or other soundness of this Company, its promoters, its
management or any scheme or project of this Company;
and it should not for any reason be deemed or construed to mean that this offer document has been
cleared or approved by the Exchange. Every person who desires to apply for or otherwise acquires any
securities of this Company may do so pursuant to independent inquiry, investigation and analysis and
shall not have any claim against the Exchange whatsoever by reason of any loss which may be suffered
by such person consequent to or in connection with such subscription/acquisition whether by reason of
anything stated or omitted to be stated herein or for any other reason whatsoever.
Disclaimer Clause of National Stock Exchange of India Limited
As required, a copy of this offer document has been submitted to the National Stock Exchange of India
Limited (hereinafter referred to as NSE). NSE has given vide its letter dated 04th July, 2011 permission to
the Issuer to use the Exchange’s name in this offer document as one of the Stock Exchanges on which
194
this Issuer’s securities are proposed to be listed. The NSE has scrutinized the Draft offer document for its
limited internal purpose of deciding on the matter of granting the aforesaid permission to this Issuer. It is
to be distinctly understood that the aforesaid permission given by NSE should not in any way be deemed
or construed that the offer document has been cleared or approved by NSE; nor does it in any manner
warrant, certify or endorse the correctness or completeness of any of the contents of this offer document;
nor does it warrant that this Issuer's securities will be listed or will continue to be listed on the Exchange;
nor does it take any responsibility for the financial or other soundness of this Issuer, its promoters, its
management or any scheme or project of the Issuer.
Every person who desires to apply for or otherwise acquire any securities of this Issuer may do so
pursuant to independent inquiry, investigation and analysis and shall not have any claim against the
Exchange whatsoever by reason of any loss which may be suffered by such person consequent to or in
connection with such subscription/acquisition whether by reason of anything stated or omitted to be
stated herein or any other reason whatsoever.
Filing
A copy of the Draft Red Herring Prospectus has been filed with SEBI at Corporation Finance Department,
Plot No.C4-A,'G' Block, Bandra Kurla Complex, Bandra (East), Mumbai 400 051. A copy of the Red
Herring Prospectus along with the documents required to be filed under section 60B of the Companies
Act would be delivered for registration to the Registrar of Companies, ROC Bhavan, Opp Rupal Park
Society, Behind Ankur Bus Stop, Naranpura, Ahmedabad- 380 013. The final Prospectus would be filed
with the SEBI and ROC at the respective aforesaid addresses upon closure of the issue and on
finalization of the issue price.
Listing
Applications have been made to the Bombay Stock Exchange Limited and the National Stock Exchange
of India Limited for permission to deal in and for an official quotation of our Equity Shares. Our existing
Equity Shares are not listed on any Stock Exchanges in India.
BSE shall be the Designated Stock Exchange with which the basis of allotment will be finalized for the
QIB, Non Institutional and Retail portion.
If the permission to deal in and for an official quotation of the Equity Shares is not granted by any of the
Stock Exchanges, we shall forthwith repay, without interest, all moneys received from the applicants in
pursuance of the Red Herring Prospectus. If such money is not repaid within eight days after we become
liable to repay it, i.e., from the date of refusal or within 70 days from the date of Bid/ Issue Closing Date,
whichever is earlier, then we and all our directors jointly and severally shall, on and from expiry of eight
days, be liable to repay the money, with interest at the rate of 15% per annum on application money, as
prescribed under Section 73 of the Companies Act.
We shall ensure that all steps for the completion of the necessary formalities for listing and
commencement of trading at BSE and NSE are taken within seven working days of finalization of Basis of
Allotment for the Issue.
Consents
Necessary Consents for the issue have been obtained from the following:
1. Directors of our Company
2. Bankers to our Company
3. Auditors to our Company
4. Book Running Lead Managers to the Issue
5. Legal Advisor to the Issue
6. Registrar to the Issue
7. IPO Grading Agency
195
8. Company Secretary cum Compliance Officer
9. Syndicate Member(s)
10. Underwriter(s)
11. Escrow Collection Banker(s) to the Issue
The said consents would be filed along with a copy of the Red Herring Prospectus with the Registrar of
Companies, Gujarat, as required under Sections 60 and 60B of the Companies Act, 1956 and such
consents have not been withdrawn up to the time of delivery of the Red Herring Prospectus, for
registration with the Registrar of Companies, Gujarat.
Expert Opinion
Except for the report of Credit Analysis & Research Ltd. in respect of the IPO grading of this Issue and
Audit report and tax Benefit certificate by the Statutory Auditors, S. Ramanand Aiyar & Co., we have not
obtained any other expert opinions.
Public Issue Expenses
The total expenses of the Issue are approximately ` ___Crores. The expenses of this Issue include Lead
Manager Fees, Registrar Fees, Legal Advisors Fees, Auditors Fees, Underwriting Fees, Printing and
Stationery Fees, Advertising Fees, IPO Grading Fees and Listing Fess. All expenses with respect to the
Issue would be paid by our Company. The estimated Issue expenses are as follows:
(` In Crores)
Activity
% of the Issue Expenses
% of Total Issue Size
Fees Payable to Lead Manager
[]
[]
Fees Payable to Registrar
[]
[]
Fees Payable to Legal Advisor
[]
[]
IPO Grading Fees
[]
[]
Advertising and Marketing Expenses
[]
[]
Printing and Stationery & Distribution
[]
[]
Brokerage
[]
[]
Others
[]
[]
[]
[]
TOTAL
Previous Public or Rights Issues in the last 5 years
Our Company has not made any public or rights issue of Equity Shares/Debentures in the last 5 years.
Previous Issue of Shares otherwise than for Cash
Our Company has not issued any Equity Shares for consideration other than cash except as mentioned in
the Chapter titled “Capital Structure” beginning on page 43 of the Draft Red Herring Prospectus.
Commission or Brokerage on Previous Issues
Since this is the initial public offering of the Equity Shares, no sum has been paid or is payable as
commission or brokerage for subscribing to or procuring for, or agreeing to procure subscription for any of
the Equity Shares of our Company since its inception.
Details of capital issue made during last three years in regard to the issuer company and other
listed companies under the same management within the meaning of section 370(1)(B) of the
Companies Act, 1956.
There have been no capital issues during last 3 years by us. There are no other listed companies under
the same management within the meaning of Sec 370(1)(B) of the Act at present or during the last three
years.
196
Promise vis-à-vis Performance – Last 3 issues
Our Company has not made any Public Issue in the past.
Listed ventures of Promoters
There are no listed ventures of our Promoters.
Promise vis-à-vis Performance – Last One Issue of Group Companies
There are no listed ventures of our Promoters.
Outstanding debentures or bonds and redeemable preference shares and other instruments
issued and outstanding as on the date of the Draft Red herring Prospectus and terms of Issue
There are no outstanding debentures or bonds or redeemable preference shares and other instruments
outstanding as on the date of filing of the Prospectus.
Stock Market Data
This being an initial public offering of our Company, the Equity Shares of our Company are not listed on
any stock exchange.
Mechanism for redressal of Investors’ grievance
Our Company has constituted a Shareholders Grievance Committee to look into the redressal of
shareholder/ investor complaints such as Issue of duplicate/split/consolidated share certificates, allotment
and listing of shares and review of cases for refusal of transfer/transmission of shares and debentures,
complaints for non receipt of dividends etc. For further details on this committee, please refer paragraph
titled “Shareholders/Investors Grievance Committee” beginning on page 111 under the Chapter titled “Our
Management” beginning on page 103 of the Prospectus. To expedite the process of share transfer, our
Company has appointed Sharepro Services (India) Private Limited as the Registrar and Share Transfer
Agents of our Company.
All grievances relating to the ASBA process may be addressed to the Registrar with a copy to the
relevant SCSB, giving full details such as name, address of the applicant, number of Equity Shares
applied for, amount paid on application and the Designated Branch of the SCSB where the ASBA Form
was submitted by the ASBA Bidders.
Disposal of Investors’ Grievances and Redressal Mechanism
We have appointed Sharepro Services (India) Private Limited as the Registrar to the Issue, to handle the
investor grievances in co-ordination with our Compliance officer. All grievances relating to the present
issue may be addressed to the Registrar with a copy to the Compliance officer, giving full details such as
name, address of the applicant, number of Equity Shares applied for, amount paid on application and
bank and Branch. We will monitor the work of the Registrar to ensure that the investor grievances are
settled expeditiously and satisfactorily.
A fortnightly status report of the complaints received and redressed by the Registrar to the Issue would be
forwarded to us. We would also coordinate with the Registrar to the Issue in attending to the investors’
grievances.
197
We assure that any complaints received, shall be disposed off as per the following schedule:
Sr. No
1.
Nature of Compliant
Non – receipt of the refund
2.
3.
Change of Address
Any other complaint in relation to
Public Issue
Time Taken
Within 7 days of receipt, subject to production of
satisfactory evidence.
Within 7 days of receipt of information
Within 7 days of receipt of compliant with all relevant
details
We have appointed Mr. Akash Parikh as the Compliance Officer who would directly liaise with SEBI with
respect to implementation/compliance of various laws, rules, regulations and other directives issued by
SEBI and matters related to investor complaints. The investors may contact the compliance officer in case
of any pre issue/post issue related problems at the following address:
Mr. Akash Parikh
Plot No 16(p)-17, 28 &29(p)
Seepz(MIDC), Andheri (East)
Mumbai - 400 096.
Maharashtra, India
Tel No.: +91 22 40707070
Fax No. : +91 22 28292258
Website : [email protected]
Email ID : [email protected]
Our Company has not received any investor complaints during the three years preceding the filing of the
Draft Red Herring Prospectus with SEBI. Further, no investor complaints are pending as on the date of
filing the Prospectus with SEBI.
Change in Auditors
There has been No Change in the Auditors.
Capitalization of Reserves or Profits during last five years
Except as stated in the Chapter titled “Capital Structure” beginning on page 42 of the Draft Red Herring
Prospectus, our Company has not capitalised its reserves or profits at any time since inception.
Revaluation of Assets during the last five years
There has not been any revaluation of Assets during the last five years.
198
SECTION VIII – ISSUE RELATED INFORMATION
TERMS OF THE ISSUE
The Equity Shares being offered are subject to the provisions of the Companies Act, SEBI (ICDR)
Regulations, 2009, our Memorandum and Articles of Association, the terms of the Draft Red Herring
Prospectus, the Red Herring Prospectus, the Prospectus, Bid cum Application Form, the Revision Form,
the Confirmation of Allocation Note and other terms and conditions as may be incorporated in the
allotment advices and other documents/certificates that may be executed in respect of the Issue. The
Equity Shares shall also be subject to laws as applicable, guidelines, notifications and regulations relating
to the issue of capital and listing and trading of securities issued from time to time by SEBI, the
Government of India, the Stock Exchanges, the RBI, ROC and/or other authorities, as in force on the date
of the Issue and to the extent applicable.
Authority for the Issue
The Issue has been authorised by a resolution of the Board, adopted pursuant to Section 81(1A) of the
Companies Act, 1956, dated, January 19, 2012 and approved by the shareholders at the Annual General
Meeting of the shareholders of our Company held on 14th February, 2012.
Ranking of Equity Shares
The Equity Shares being offered shall be subject to the provisions of the Companies Act, our
Memorandum and Articles of Association and shall rank pari-passu in all respects with the existing Equity
Shares including in respect of the rights to receive dividend. The allottees will be entitled to dividend,
voting rights or any other corporate benefits, if any, declared by us after the date of Allotment. For further
details, please refer to Chapter titled “Main Provisions of Articles of Association” on page 247 of the Draft
Red Herring Prospectus.
Mode of Payment of Dividend
We shall pay dividend to our Shareholders as per the provisions of the Companies Act and our Articles of
Association. The declaration and payment of dividends will be recommended by our Board of Directors
and our shareholders, in their discretion, and will depend on a number of factors, including but not limited
to our earnings, capital requirements and overall financial condition. We shall pay dividends in cash.
Face Value and Issue Price per Share
The Equity Shares having a face value of ` 10 each are being offered in terms of the Draft Red Herring
Prospectus at a price of ` [•] per Equity Share. The issue price will be determined by our Company in
consultation with the BRLM on the basis of assessment of market demand for the Equity Shares offered
by way of book building. At any given point of time there shall be only one denomination of the Equity
Shares of our Company, subject to applicable laws. The Issue Price is [•] times the face value of the
Equity Shares.
Rights of the Equity Shareholders
Subject to applicable laws, rules, regulations and guidelines and the Articles of Association, the equity
shareholders shall have the following rights:
x
x
x
x
x
Right to receive dividend, if declared;
Right to attend general meetings and exercise voting rights, unless prohibited by law;
Right to vote on a poll either in person or by proxy;
Right to receive offer for rights shares and be allotted bonus shares, if announced;
Right to receive surplus on liquidation;
199
x
x
Right of free transferability; and
Such other rights, as may be available to a shareholder of a listed Public Limited Company under
the Companies Act, the terms of the listing agreements with the Stock Exchange(s) and the
Memorandum and Articles of Association our Company.
For a detailed description of the main provisions of the Articles of Association of our Company relating to
voting rights, dividend, forfeiture and lien and/or consolidation/splitting, please refer to Chapter titled
“Main Provisions of Articles of Association” on page 247 of the Draft Red Herring Prospectus.
Market Lot and Trading Lot
In terms of Section 68B of the Companies Act, the Equity Shares shall be allotted only in dematerialised
form. As per the existing SEBI (ICDR) Regulations, 2009, the trading in the Equity Shares shall only be in
dematerialised form for all investors.
Since trading of our Equity Shares is in dematerialised form, the tradable lot is one Equity Share.
Allocation and Allotment through this Issue will be done only in electronic form in multiples of one Equity
Shares to the successful Bidders subject to a minimum Allotment of [] Equity Shares. For details of
Allocation and Allotment, please refer to the paragraph titled “Basis of Allotment” beginning on page 235
under Chapter titled “Issue Procedure” beginning on page 25 of the Draft Red Herring Prospectus.
Nomination Facility to Investor
In accordance with Section 109A of the Companies Act, the sole or first Bidder, along with other joint
Bidders, may nominate any one person in whom, in the event of the death of sole Bidder or in case of
joint Bidders, death of all the Bidders, as the case may be, the Equity Shares transmitted, if any, shall
vest. A person, being a nominee, entitled to the Equity Shares by reason of the death of the original
holder(s), shall in accordance with Section 109A of the Companies Act, be entitled to the same
advantages to which he or she would be entitled if he or she were the registered holder of the equity
share(s). Where the nominee is a minor, the holder(s) may make a nomination to appoint, in the
prescribed manner, any person to become entitled to equity share(s) in the event of his or her death
during the minority. A nomination shall stand rescinded upon a sale of equity share(s) by the person
nominating. A buyer will be entitled to make a fresh nomination in the manner prescribed. Fresh
nomination can be made only on the prescribed form available on request at our Registered Office or to
the registrar and transfer agents of our Company.
In accordance with Section 109B of the Companies Act, any person who becomes a nominee by virtue of
the provisions of Section 109A of the Companies Act, shall upon the production of such evidence as may
be required by the Board, elect either:
a) to register himself or herself as the holder of the Equity Shares; or
b) to make such transfer of the Equity Shares, as the deceased holder could have made.
Further, the Board may at any time give notice requiring any nominee to choose either to be registered
himself or herself or to transfer the Equity Shares, and if the notice is not complied with within a period of
ninety days, the Board may thereafter withhold payment of all dividends, bonuses or other moneys
payable in respect of the Equity Shares, until the requirements of the notice have been complied with.
Since the allotment of Equity Shares in the Issue will be made only in dematerialized mode there
is no need to make a separate nomination with our Company. Nominations registered with
respective depository participant of the applicant would prevail. If the investor wants to change
the nomination, they are requested to inform their respective depository participant.
200
Bid/Issue Program
The period of operation of subscription list of public issue:
Bid/ Issue Opens on []
Bid/ Issue Closes on []
Minimum Subscription
If our Company does not receive 90% of the Issue through the Red Herring Prospectus on the date of
closure of the Issue, or if the subscription level falls below ninety per cent after the closure of Issue on
account of cheques having being returned unpaid or withdrawal of applications, the Issuer shall forthwith
refund the entire subscription amount received. If there is a delay beyond eight days after the Issuer
becomes liable to pay the amount, the Issuer shall pay interest as per section 73 of the Companies Act,
1956.
Further, in accordance with Clause 26(4) of the SEBI (ICDR) Regulations, the Company shall ensure that
the number of prospective allottees to whom the Equity Shares will be allotted will be not less than 1,000.
Arrangements for Disposal of Odd Lots
Since, our Equity Shares will be traded in dematerialized form only; the marketable lot is one (1) Equity
Share. Therefore, there is no possibility of any odd lots.
Restrictions, if any on Transfer and Transmission of Equity Shares
For a detailed description in respect of restrictions, if any, on transfer and transmission of shares and on
their consolidation/splitting, please refer to under the Chapter titled “Main Provisions of Articles of
Association” on page 230 of the Draft Red Herring Prospectus.
Compliance with SEBI (ICDR) Regulations, 2009
Our Company shall comply with all requirements of the SEBI (Issue of Capital and Disclosure
Requirements) Regulations 2009, notified on August 26, 2009 as amended from time to time. Our
Company shall comply with all disclosure norms as specified by SEBI from time to time.
Option to Receive Securities in Dematerialized Form
Equity Shares being offered through the Draft Red Herring Prospectus can be applied for and will be
allotted in dematerialized form only.
201
ISSUE STRUCTURE
Public issue of 1,30,00,000 equity shares of ` 10/- each at a price of ` [] per equity share (including a
premium of ` [] per equity share) for cash aggregating upto ` [] Crores (the “issue”). The issue will
constitute 40.00% of the fully diluted post issue paid up capital of the company. The Issue is being made
by 100% Book Building process.
Details of the Issue structure are tabulated below:
Particulars
QIBs*
Non
Institutional
Bidders
Not less than 19,50,000
Equity Shares
Not less than 15% of
the Net issue to the
public or Net Issue size
less allocation to QIBs
and retail individual
bidders *
Retail
Individual
Bidders
Not less than 45,50,000
Equity Shares
Not less than 35% of
the Net issue to the
public or Net Issue size
less allocation to QIBs
and non institutional
bidders *
Number
of
Equity
Shares
Percentage of issue
size
available
for
allocation
Up to 65,00,000 Equity
Shares
Up to 50% of the Net
Issue to the public (of
which 5% shall be
reserved for Mutual
Funds) or Net Issue to
the public less allocation
to Non- Institutional
Bidders
and
Retail
Individual Bidders.*
Mutual
Funds
participating in the 5%
reservation in the QIB
Portion will also be
eligible for allocation in
the
remaining
QIB
Portion.
The
Unsubscribed portion, if
any, in the Mutual Fund
reservation
will
be
available to QIBs.
Proportionate
Proportionate
Proportionate
Such number of Equity
Shares that the Bid
Amount
exceeds
`
2,00,000.
Not exceeding the size
of the issue, subject to
regulations
as
applicable to the Bidder
Such number of Equity
Shares that the Bid
Amount
exceeds
`
2,00,000.
Not exceeding the size
of the issue, subject to
regulations
as
applicable to the Bidder
[] Equity Shares.
Mode of Allotment
Dematerialized mode
Dematerialized mode
Such number of Equity
Shares so as to ensure
that the Bid amount
does not exceed `
2,00,000.
Dematerialized mode
Bid Lot
[] Equity Shares and in
multiples of [] Equity
Shares.
[] Equity Shares and in
multiples of 1 Equity
Share thereafter.
One (1) Equity Share
Public
financial
[] Equity Shares and in
multiples of [] Equity
Shares.
[]Equity Shares and in
multiples of 1 Equity
Share thereafter.
One (1) Equity Share
Companies, Corporate
[] Equity Shares and in
multiples of [] Equity
Shares
[]Equity Shares and in
multiples of 1 Equity
Share thereafter.
One (1) Equity Share
Individuals
(including
Basis of Allocation if
Respective category is
oversubscribed
Minimum Bid
Maximum Bid
Allotment Lot
Trading Lot/Market lot
Who can apply**
202
Terms of payment
Margin Amount
institutions, as specified
in Section 4A of the
Companies
Act,
scheduled commercial
banks, mutual funds,
foreign
institutional
investor registered with
SEBI, multilateral
and
bilateral
development financial
institutions,
Venture
Capital
Funds
registered with SEBI,
foreign Venture capital
investors registered with
SEBI, State Industrial
Development
Corporations, insurance
companies
registered
with
the
Insurance
Regulatory
and
Development Authority,
provident funds with
minimum corpus of `
2500 Lacs and pension
funds with minimum
corpus of ` 2500 Lacs,
National
Investment
Fund in accordance with
applicable law.
Margin
Amount
applicable
to
QIB
Bidders at the time of
submission of Bid cum
Application form to the
members
of
the
syndicate
Full amount on bidding
Bodies,
Scientific
Institutions, Societies,
Trusts, Resident Indian
individuals, HUF (in the
name of Karta), and
NRIs (applying for an
amount exceeding `
2,00,000)
ASBA Bidders, NRIs
and HUFs in the name
of Karta) applying for
Equity Shares such that
the Bid Amount does
not exceed ` 2,00,000
in value.
Resident
Retail
Individual Investor can
also bid through ASBA.
Margin
Amount
applicable
to
Non
Institutional Bidders at
the time of submission
of Bid cum Application
form to the members of
the syndicate
Full amount on bidding
Margin
Amount
applicable to Retail
Individual Bidders at the
time of submission of
Bid cum Application
form to the members of
the syndicate
Full amount on bidding
*This Issue is being made through a 100% Book Building Process wherein up to 50% of the Issue shall
be allocated on a proportionate basis to QIBs, Subject to valid Bids being received at or above the Issue
Price. 5% of the Net QIB Portion shall be available for allocation on a proportionate basis to Mutual Funds
only. The remainder shall be available for allocation on a proportionate basis to QIBs, subject to valid
Bids being received from them at or above the Issue Price. However, if the aggregate demand from
domestic Mutual Funds is less, than the balance Equity Shares available for allocation in the Mutual Fund
Portion will be added to the QIB Portion and allocated proportionately to the QIBs in proportion to their
Bids.
**Further, not less than 15% of the Issue shall be available for allocation on a proportionate basis to NonInstitutional Bidders and not less than 35% of the Issue shall be available for allocation on a proportionate
basis to Retail Individual Bidders, subject to valid Bids being received at or above the Issue Price.
Subject to valid Bids being received at or above the Issue Price, under-subscription, if any, in QIBs, NonInstitutional and Retail Individual categories would be allowed to be met with spill-over inter-se from any
other categories, at the sole discretion of our Company, BRLM and subject to applicable provisions of
SEBI Regulations.
203
*** In case the Bid Cum Application Form is submitted in joint names, the investors should ensure that the
demat account is also held in the same joint names and in the same sequence in which they appear in
the Bid Cum Application Form.
The number of prospective Allottees of Equity Shares in this Issue shall not be less than 1,000.
Equity Shares being offered through the Draft Red Herring Prospectus can be applied for in
dematerialized form only.
Withdrawal of the Issue
The Company, in consultation with the BRLM, reserves the right not to proceed with the Issue anytime
after the Bid/Issue Opening Date but before the Allotment of Equity Shares. In such an event the
Company would issue a public notice in the newspapers, in which the pre-Issue advertisements were
published, within two days of the Bid/ Issue Closing Date, providing reasons for not proceeding with the
Issue. The Company shall also inform the same to Stock Exchanges on which the Equity Shares are
proposed to be listed.
In the event that our Company decides not to proceed with the Issue after Bid/ Issue Closing Date and
thereafter determines that it will proceed with an initial public offering of its Equity Shares, the Company
shall file a fresh DRHP with SEBI.
204
ISSUE PROCEDURE
This chapter applies to all Bidders. Please note that all Bidders can participate in this Issue through the
ASBA process. Furthermore, pursuant to SEBI circular bearing number CIR/CFD/DIL/1/2011 dated April
29, 2011 non-retail Investors are mandatorily required to utilise the ASBA facility to participate in the
Issue. ASBA Bidders should note that the ASBA process involves application procedures that are
different from the procedure applicable to Bidders other than the ASBA Bidders. Bidders applying through
the ASBA process should carefully read the provisions applicable to such applications before making their
application through the ASBA process. Please note that all Bidders are required to make payment of the
full Bid Amount with the Bid-cum-Application Form. In case of ASBA Bidders, an amount equivalent to the
full Bid Amount will be blocked by the SCSB.
Please note that the information stated/covered in this section may not be complete and/or accurate and
as such would be subject to modification/change. Our Company and the Book Running Lead Manager
would not be liable for any amendment, modification or change in applicable law, which may occur after
the date of the Draft Red Herring Prospectus. Bidders are advised to make their independent
investigations and ensure that their Bids do not exceed the investment limits or maximum number of
Equity Shares that can be held by them under applicable law or as specified in the Red Herring
Prospectus and the Prospectus.
Book Building Procedure
In terms of Rule 19(2)(b)(i) of the SCRR, this Issue is for more than 25% of the post-Issue equity share
capital of our Company. The Issue is being made through the Book Building Process wherein upto 50% of
the Issue shall be Allotted to QIBs on a proportionate basis. Out of the QIB Portion, 5% will be available
for allocation on a proportionate basis to Mutual Funds only. The remainder will be available for allocation
on a proportionate basis to QIBs and Mutual Funds, subject to valid Bids being received from them at or
above the Issue Price.
Further, not less than 15% of the Issue would be available for allocation to Non-Institutional Bidders and
not less than 35% of the Issue would be available for allocation to Retail Individual Bidders on a
proportionate basis, subject to valid Bids being received from them at or above the Issue Price.
Any Bidder may participate in this Issue through the ASBA process by providing the details of their
respective bank accounts in which the corresponding Bid amounts will be blocked by SCSBs. Non- retail
investors are mandatorily required to make use of the ASBA facility. All Bidders including ASBA Bidders
can submit their Bids through the Syndicate (at ASBA bidding locations). Pursuant to SEBI circular
number CIR/CFD/DIL/1/2011 dated April 29, 2011, the Syndicate / sub-syndicate members may procure
the ASBA Bid cum Application Form from investors in Mumbai, Chennai, Kolkata, Delhi, Ahmedabad,
Rajkot, Jaipur, Bangalore, Hyderabad, Pune, Baroda and Surat and submit the same to the SCSB.
Syndicate/ sub-syndicate members are required to upload the bid and other relevant details of the ASBA
Bid-cum-Application Form in the electronic bidding system provided by the Stock Exchanges and forward
the same to the SCSBs.
Bidders (including ASBA Bidders) can submit their Bids through the Syndicate or their affiliates. In case of
QIBs, our Company may, in consultation with Book Running Lead Manager, reject their Bids at the time of
acceptance of the Bid-cum-Application Form, provided that the reasons for such rejection shall be
disclosed to such QIB in writing. In case of Non-Institutional Bidders and Retail Individual Bidders, our
Company will have the right to reject the Bids only on technical grounds.
Investors should note that the Equity Shares will be allotted to all successful Bidders only in
dematerialised form. The Bid-cum-Application Forms which do not have the details of the Bidders’
depository account including DP ID, PAN and Beneficiary Account Number shall be treated as incomplete
and rejected. Bidders will not have the option of being Allotted Equity Shares in physical form. Investors
should note that the Equity Shares on Allotment shall be traded only in the dematerialised segment of the
Stock Exchanges.
205
Any Bidder may participate in this Issue through the ASBA process by providing the details of their
respective bank accounts / bank account held by a third party (subject to conditions as set forth herein
below) in which the corresponding Bid amounts will be blocked by SCSBs.
Bidders are required to ensure that the PAN (of the sole/ first Bidder) provided in the Bid cum Application
Form is exactly the same as the PAN of the person(s) in whose name the relevant beneficiary account is
held.
ASBA Process
In accordance with the SEBI ICDR Regulations, all Bidders (including QIB Bidders) can participate in the
Issue through the ASBA process. ASBA Bidders shall submit an ASBA Bid-cum-Application Form either
(i) in physical form to the Designated Branch of an SCSB or to the members of the Syndicate (at ASBA
Bidding Locations) (ii) in electronic form through the internet banking facility offered by an SCSB,
authorizing blocking of funds that are available in the bank account (“ASBA Account”) specified in the
ASBA Bid-cum-Application Form used by ASBA Bidders. The SCSB shall block an amount equal to the
Bid Amount in the ASBA Account, on the basis of an authorization to this effect given by the account
holder at the time of submitting the Bid. The ASBA data shall be uploaded by the SCSB or by the
members of the Syndicate in the electronic bidding system of the Stock Exchanges. The Bid Amount shall
remain blocked in the ASBA Account until approval of the basis of Allotment in the Issue by the
Designated Stock Exchange and consequent transfer of the Bid Amount against the allocated shares to
the Public Issue Account, or until withdrawal or failure of the Issue or until withdrawal or rejection of the
ASBA Bid, as the case may be. Once the basis of Allotment is approved by the Designated Stock
Exchange, the Registrar to the Issue shall send an appropriate request to the Controlling Branch of the
SCSB for unblocking the relevant bank accounts and for transferring the requisite amount to the Public
Issue Account. In case of withdrawal or failure of the Issue, the blocked amount shall be unblocked on
receipt of such information from the Book Running Lead Manager and/or the Registrar. Our Company
shall pay a commission to the Syndicate/Sub-syndicate members for the services rendered in relation to
the ASBA Process.
Bid-cum-Application Form and ASBA Bid-cum-Application Form
Pursuant to SEBI circular CIR/CFD/DIL/4/2011 dated September 27, 2011, Bid cum Application
Forms have been standardized and it has been decided that henceforth there would only be a
single form for ASBA and non-ASBA Bidders. It has also been decided that the Bid cum
Application Form (accompanied with abridged prospectus) would be printed in a booklet form of
A4 size paper.
Bid cum Application Forms for ASBA Bidders will also be available on the website of the NSE
(www.nseindia.com) and BSE (www.bseindia.com) at least one day prior to Bid/Issue Opening Date. A
hyperlink to the websites of the Stock Exchanges for this facility will be provided on the websites of the
Book Running Lead Manager and the SCSBs. Same Bid cum Application Form applies to all ASBA Bids
irrespective of whether they are submitted to the SCSBs or to the Syndicate ASBA Bidding Locations.
Copies of the Bid cum Application Form will be available for all categories of Bidders, with the members of
the Syndicate and at our Registered Office. In addition, Bid cum Application Forms in physical form will be
available with the Designated Branches, and electronic Bid cum Application Forms will be available on
the websites of the SCSBs and of the Stock Exchanges at least one day prior to the Bid Opening Date.
Copies of the Red Herring Prospectus shall, on a request being made by any Bidder before the Bid/Issue
Closing Date, be furnished to such Bidder at our Registered Office and the Designated Branches. Bidders
shall only use the specified Bid cum Application Form bearing the stamp of a member of the Syndicate,
unless they are using the ASBA Process. Before being issued to the Bidders, the Bid cum Application
Form shall be serially numbered.
206
The Bid cum Application Form shall contain information about the Bidders, the price and the number of
Equity Shares Bid for. Bidders shall have the option to make a maximum of three Bids (in terms of
number of Equity Shares and respective Bid Amount) in the Bid cum Application Form and such options
shall not be considered as multiple Bids.
No separate receipts shall be issued for the money payable on the submission of the Bid-cum-Application
Form or ASBA Bid-cum-Application Form and Revision Form. The collection centre of the Syndicate will,
after the Bid has been uploaded, acknowledge the uploading of the Bid cum Application Form or Revision
Form by stamping the acknowledgment slip with the date and time and returning it to the Bidder. This
acknowledgment slip shall serve as the duplicate of the Bid cum Application Form for the records of the
Bidder and the Bidder shall preserve this and should provide the same for any queries relating to nonAllotment of Equity Shares in the Issue.
Upon completing and submitting the Bid cum Application Form to a member of the Syndicate, the Bidder
is deemed to have authorised our Company to make the necessary changes in the Red Herring
Prospectus and the Bid cum Application Form as would be required for filing the Prospectus with the RoC
and as would be required by the RoC after such filing, without prior or subsequent notice of such changes
to the Bidder. Upon determination of the Issue Price and filing of the Prospectus with the RoC, the Bid
cum Application Form shall be considered as the application form.
Bidders can also submit their Bids through the ASBA by submitting Bid cum Application Forms, either in
physical or electronic mode, to the SCSB with whom the ASBA Account is maintained or through the
members of the Syndicate/ sub-Syndicate (ASBA Bids through the members of the Syndicate/ subSyndicate shall hereinafter be referred to as the “Syndicate ASBA”). However, ASBA Bids through
submitted to the Syndicate is permitted only at the Syndicate ASBA Bidding Locations (Mumbai, Chennai,
Kolkata, Delhi, Ahmedabad, Rajkot, Jaipur, Bangalore, Hyderabad, Pune, Vadodara and Surat). Kindly
note that Bid cum Application Forms submitted by ASBA Bidders to members of the Syndicate at the
Syndicate ASBA Bidding Locations will not be accepted if the SCSB with which the ASBA Account, as
specified in the Bid cum Application Form, is maintained has not named at least one branch at that
location for the members of the Syndicate to deposit the Bid cum Application Form (A list of such
branches is available at http://www.sebi.gov.in/cms/sebi_data/attachdocs/1329804293371.html).
ASBA Bidders can submit their Bids, either in physical or electronic mode. In case of application in
physical mode, the ASBA Bidder shall submit the Bid cum Application Form, which shall be stamped, at
the relevant Designated Branch. Bid cum Application Form in physical mode, which shall be stamped,
can also be submitted to be members of the Syndicate at Syndicate ASBA Bidding Locations. In case of
application in electronic form, the ASBA Bidder shall submit the Bid cum Application Form either through
the internet banking facility available with the SCSBs or such other electronically enabled mechanism for
Bidding and blocking funds in the ASBA Account held with SCSB, and accordingly registering such Bids.
The SCSB shall block an amount in the ASBA Account equal to the Bid Amount specified in the Bid cum
Application Form. Upon completing and submitting the Bid cum Application Form to the SCSB or to the
members of the Syndicate, the ASBA Bidder is deemed to have authorised our Company to make the
necessary changes in the Red Herring Prospectus and the Bid cum Application Form, as would be
required for filing the Prospectus with the RoC and as would be required by RoC after such filing, without
prior or subsequent notice of such changes to the ASBA Bidder.
The prescribed colour of the Bid-cum-Application Form for the various categories is as follows:
207
Category
Colour Of Bid-CumApplication Form/ASBA
Bid Cum Application Form*
Resident Indians and Eligible NRIs applying on a non-repatriation basis
(ASBA as well as non ASBA Bidders)
White
Eligible NRIs, FIIs their Sub-Accounts (other than Sub-Accounts which
are foreign corporates or foreign individuals bidding under the QIB
Portion) or FVCIs, QFIs applying on a repatriation basis (ASBA as well as
non ASBA Bidders)
Blue
* Bid-cum-Application Forms for ASBA Bidders will also be available on the website of the NSE
(www.nseindia.com) and BSE (www.bseindia.com) Same ASBA Bid-cum-Application Form applies to all
ASBA Bids irrespective of whether they are submitted to the SCSBs or to the Syndicate (in specified
cities).
Who can Bid?
1. Indian nationals resident in India who are competent to contract under the Indian Contract Act, 1872,
in single or joint names (not more than three);
2. Persons eligible to invest in the Equity Shares under all applicable laws, rules, regulations and
guidelines;
3. HUFs, in the individual name of the Karta. The Bidder should specify that the Bid is being made in the
name of the HUF in the Bid-cum-Application Form as follows: “Name of Sole or First Bidder: XYZ
Hindu Undivided Family applying through XYZ, where XYZ is the name of the Karta”. Bids by
HUFs would be considered at par with those from individuals;
4. Companies, corporate bodies and societies registered under the applicable laws in India and
authorized to invest in Equity Shares;
5. Mutual Funds registered with SEBI;
6. Indian financial institutions, commercial banks (excluding foreign banks), regional rural banks, cooperative banks (subject to RBI regulations and SEBI ICDR Regulations, as applicable);
7. Multilateral and bilateral development financial institutions;
8. Venture Capital Funds registered with SEBI;
9. Foreign Venture Capital Investors registered with SEBI subject to compliance with applicable laws,
rules, regulations, guidelines and approvals in the Issue;
10. QFIs (subject to compliance with RBI circular bearing reference RBI/2011-12/347 dated January 13,
2012 and SEBI circular bearing reference CIR/ IMD/FII&C/3/2012 dated January 13, 2012);
11. FIIs and sub-accounts registered with SEBI other than a sub-account which is a foreign corporate or
foreign individual, subject to compliance with applicable laws, rules, regulations, guidelines and
approvals in the Issue;
12. Sub-accounts of FIIs registered with SEBI, which are foreign corporates or foreign individuals only
under the Non-Institutional Bidders category;
13. Limited Liability Partnerships (LLPs) registered in India and authorised to invest in equity shares;
14. State Industrial Development Corporations;
15. Insurance companies registered with the Insurance Regulatory and Development Authority;
16. Provident funds with a minimum corpus of ` 2,500 Lacs and who are authorized under their
constitution to invest in Equity shares;
17. Pension funds a with minimum corpus of `` 2,500 Lacs and who are authorized under their
constitution to invest in Equity Shares;
18. National Investment Fund;
19. Trusts/societies registered under the Societies Registration Act, 1860, as amended, or under any
other law relating to trusts and who are authorized under their respective constitutions to hold and
invest in Equity Shares;
20. Eligible Non-residents including NRIs and FIIs on a repatriation basis or a non-repatriation basis
208
21.
22.
23.
24.
25.
subject to applicable local laws. NRIs other than eligible NRIs are not eligible to participate in this
Issue;
Scientific and/or industrial research organizations authorized under their constitution to invest in
Equity Shares;
Any other QIBs permitted to invest, subject to compliance with applicable laws, rules, regulations,
guidelines and approvals in the Issue;
Insurance funds set up and managed by army, navy or air force of the Union of India;
Insurance Funds set-up and managed by Department of Posts, India; and
All other persons eligible to invest under all applicable laws, rules regulations and guidelines.
As per the existing regulations, OCBs are not eligible to participate in this Issue.
Bidders are advised to ensure that any single Bid from them does not exceed the investment
limits or maximum number of Equity Shares that can be held by them under applicable law.
Participation by associates/ affiliates of Book Running Lead Manager and Syndicate Members
The Book Running Lead Manager and the Syndicate Members shall not be entitled to subscribe to this
Issue in any manner except towards fulfilling their underwriting obligations. Associates and affiliates of the
Book Running Lead Manager and the Syndicate Members may subscribe to Equity Shares in the Issue,
including in the QIB Portion and Non-Institutional Portion as may be applicable to such Bidder, where the
allocation is on a proportionate basis. Such bidding and subscription may be on their own account or for
the account of their clients.
Bids by FIIs
As per the current regulations, the following restrictions are applicable for investments by FIIs:
The issue of Equity Shares to a single FII should not exceed 10% of the post-Issue paid-up capital of our
Company. In respect of an FII investing in Equity Shares of our Company on behalf of its sub-accounts,
the investment on behalf of each sub-account shall not exceed 10% of the total issued capital of our
Company or 5% of our total issued capital in case such sub-account is a foreign corporate or an
individual. In accordance with the foreign investment limits applicable to our Company, such investment
must be made out of funds raised or collected or brought from outside through normal banking channels
and the investment must not exceed the overall ceiling specified for FIIs. Under the portfolio investment
scheme, the aggregate issue of equity shares to FIIs and their sub-accounts should not exceed 24% of
post-issue paid-up equity capital of a company. However, this limit can be increased to the permitted
sectoral cap/statutory limit, as applicable to our Company after obtaining approval of its Board of
Directors followed by a special resolution to that effect by its shareholders in their general meeting. With
the approval of the Board of Directors and the shareholders by way of a special resolution, the aggregate
FII holding can go up to the applicable sectoral caps.
A sub-account of an FII which is a foreign corporate or foreign individual shall not be considered to be a
Qualified Institutional Buyer, as defined under the SEBI ICDR Regulations, for this Issue.
Subject to compliance with all applicable Indian laws, rules, regulations, guidelines and approvals in
terms of Regulation 15A(1) of the Securities Exchange Board of India (Foreign Institutional Investors)
Regulations 1995, as amended (the “SEBI FII Regulations”), an FII as defined in the SEBI FII Regulations
may issue, or otherwise deal in offshore derivative instruments (defined under the SEBI FII Regulations
as any instrument, by whatever name called, which is issued overseas by an FII against securities held
by it that are listed or proposed to be listed on any recognised stock exchange in India, as its underlying)
directly or indirectly, only in the event (i) such offshore derivative instruments are issued only to persons
who are regulated by an appropriate regulatory authority; and (ii) such offshore derivative instruments are
issued after compliance with ‘know your client’ norms. The FII is also required to ensure that no further
issue or transfer of any offshore derivative instrument issued by it is made to any persons that are not
regulated by an appropriate foreign regulatory authority as defined under the SEBI FII Regulations.
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Associates and affiliates of the underwriters including the Book Running Lead Manager and the Syndicate
Members that are FIIs may issue offshore derivative instruments against Equity Shares Allotted to them in
the Issue. Any such offshore derivative instrument does not constitute any obligation of, claim on or an
interest in our Company.
Bids by SEBI registered Venture Capital Funds and Foreign Venture Capital Investors
The SEBI (Venture Capital) Regulations, 1996 as amended and the SEBI (Foreign Venture Capital
Investor) Regulations, 2000 as amended, prescribe investment restrictions on venture capital funds and
foreign venture capital investors registered with SEBI.
Accordingly, the holding by any individual venture capital fund or foreign venture capital investor
registered with SEBI should not exceed 25% of the corpus of the venture capital fund/foreign venture
capital investor. However, venture capital funds or foreign venture capital investors may invest not more
than 33.33% of their respective investible funds in various prescribed instruments, including in initial
public offers of venture capital undertakings whose shares are proposed to be listed.
Pursuant to the SEBI ICDR Regulations, the shareholding of SEBI registered Venture Capital Funds and
Foreign Venture Capital Investors held in a company prior to making an Initial Public Offering would be
exempt from lock-in requirements only if the shares have been held by them for at least one year prior to
the time of filing the Draft Red Herring Prospectus with SEBI.
Bids by Qualified Foreign Investors
Under the extant Indian laws, the individual and aggregate investment limits for QFIs are 5% and 10%
respectively of the paid up capital of Indian company. These limits are over and above the FII and NRI
investment ceilings prescribed under the PIS route for foreign investment in India.
1.
2.
3.
4.
5.
6.
7.
8.
Eligible instruments and transactions: QFIs shall be allowed to invest through SEBI registered
Qualified Depository Participant (DP) in equity shares of listed companies as well such companies whose
shares are offered to public.
Mode of payment: The DP will maintain a separate single rupee pool account with an AD Category –
I bank in India, in which the sale proceeds of equity shares will be received. Dividend payments to
QFIs could either be received in this single rupee pool account or directly in the designated overseas
bank account.
Demat accounts: QFIs would be allowed to open a dedicated demat account with a DP in India.
However, opening a bank account in India is not allowed.
Limits: The individual and aggregate investment limit for QFIs are 5% and 10%respectively of the
paid up capital of Indian company. These limits are over and above the FII and NRI investment
ceilings prescribed under the PIS route for foreign investment in India.
Eligibility: Only QFIs from jurisdiction which is compliant with Financial Action Task Force (FATF)
standards and that is a signatory to International Organization of Securities Commission's (IOSCO’s)
Multilateral Memorandum of Understanding (MMOU).
KYC: DP will ensure the KYC of QFI as per SEBI KYC norms.
Permissible currencies: QFIs shall remit money through normal banking channel in any permitted
currency (freely convertible) directly to the single rupee pool bank account of the DP maintained with
a designated AD category - I bank. Upon receipt of instructions from QFI, DP shall carry out the
transactions (purchase/sale of equity).
Pricing: As per SEBI guidelines.
Reporting: DP will ensure reporting to RBI, in the prescribed manner.
SEBI has issued the circular bearing reference number CIR / IMD/FII&C/3/2012 dated 13 January 2012
allowing QFIs to invest in equity shares of listed Indian companies and in equity shares offered to public.
The circular sets out the eligible transactions for QFIs, the requirements for becoming a qualified
depository participant, provisions relating to account opening and manner of operation by QFI, investment
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restrictions and monitoring of investment limits, process flow – purchase, sale, dividend etc.
Bids by QFIs (who are individuals) for a Bid Amount of up to ` 2,00,000 would be considered under the
Retail Portion for the purposes of allocation. Bids by QFIs (who are individuals) for a Bid Amount of above
` 2,00,000 would be considered under Non-Institutional Portion for the purposes of allocation and such
Bidders should use the ASBA facility to submit their Bids.
Bids by QFIs (other than who are individuals) can Bid only for a Bid Amount of more than ` 2,00,000 and
their Bids would be considered under Non-Institutional Portion for the purposes of allocation and such
Bidders should use the ASBA facility to submit their Bids.
Refunds, dividends and other distributions, if any, will be payable in Indian Rupees only at the
rate of exchange prevailing at the time of remittance and net of bank charges and / or
commission. In case of Bidders who remit money through Indian Rupee drafts purchased abroad,
such payments in Indian Rupees will be converted into USD or any other freely convertible
currency as may be permitted by the RBI at the rate of exchange prevailing at the time of
remittance and will be dispatched by registered post or if the Bidders so desire, will be credited to
their NRE accounts, details of which should be furnished in the space provided for this purpose in
the Bid-cum-Application Form. Our Company will not be responsible for loss, if any, incurred by
the Bidder on account of conversion of foreign currency.
Bids by Mutual Funds
Procedure for applications by Mutual Funds
An eligible Bid by a Mutual Fund shall first be considered for allocation proportionately in the Mutual Fund
Portion. In the event that the demand is greater than 2,02,500 Equity Shares, allocation shall be made to
Mutual Funds proportionately, to the extent of the Mutual Fund Portion. The remaining demand by the
Mutual Funds shall, as part of the aggregate demand by QIBs, be available for allocation proportionately
out of the remainder of the QIB Portion after excluding the allocation in the Mutual Fund Portion.
As per the SEBI ICDR Regulations, 5% of the QIB Portion, has been specifically reserved for Mutual
Funds for allocation on a proportionate basis. An eligible Bid by a Mutual Fund in the Mutual Fund Portion
shall first be considered for allocation proportionately in the Mutual Fund Portion.
As per the current regulations, the following restrictions are applicable for investments by mutual funds:
No Mutual Fund scheme shall invest more than 10% of its net asset value in equity shares or
equity related instruments of any single company provided that the limit of 10% shall not be
applicable for investments in index funds or sector or industry specific funds. No Mutual Fund
under all its schemes should own over 10% of any company’s paid-up share capital carrying
voting rights.
The Bids made by Asset Management Companies or Custodians of Mutual Funds should
specifically state the name of concerned schemes for which Bids are made.
Multiple applications by Mutual Funds
In case of a mutual fund, a separate Bid can be made in respect of each scheme of the mutual
fund registered with SEBI and such Bids in respect of more than one scheme of the mutual fund
will not be treated as multiple Bids provided that the Bids clearly indicate the scheme concerned
for which the Bid has been made.
Bids by Eligible NRIs or FIIs or VCFs or QFIs on a repatriation basis
There is no reservation for Eligible NRIs or FIIs registered with SEBI or VCFs registered with SEBI or
211
QFIs. Such Eligible NRIs or FIIs registered with SEBI or QFIs will be treated on the same basis as other
categories for the purpose of allocation. As per regulations made by the RBI, OCBs cannot participate in
this Issue.
Bids by Eligible Non Resident Indians (NRIs)
Bid-cum-Application Forms have been made available for eligible NRIs at the Registered Office of our
Company and with the members of the Syndicate or SCSBs and the Registrar, as the case may be.
Eligible NRIs should note that only such applications as are accompanied by payment in free foreign
exchange or by debit to their NRE/FCNR accounts shall be considered for Allotment on repatriation basis.
Eligible NRIs intending to participate in the Bidding process shall ensure that their foreign address is
registered with their depository participant or furnished on the Bid-cum-Application form. Post Allotment, if
any, on repatriable basis, our Company is required to file FC-GPR or FCTRS, as the case may be, with
the Reserve Bank of India through an authorised dealer along with a KYC (Know Your Client) report
issued by their banker. Eligible NRIs who may be Allotted Equity Shares of our Company in this Issue are
required to facilitate the issue of the said report to be furnished to RBI.
The Eligible NRIs who intend to make payment through Non-Resident Ordinary (NRO) accounts should
use the form meant for Resident Indians and not use the forms meant for any reserved category. All
instruments accompanying Bids shall be payable in Mumbai only.
Bids by limited liability partnerships
In case of Bids made by limited liability partnerships registered under the Limited Liability Partnership Act,
2008, a certified copy of certificate of registration issued under the Limited Liability Partnership Act, 2008,
must be attached to the Bid cum Application Form. Failing this, our Company reserves the right to reject
any Bid without assigning any reason thereof. Limited liability partnerships can participate in the Issue
only through the ASBA process.
Bids by insurance companies
In case of Bids made by insurance companies registered with the IRDA, a certified copy of certificate of
registration issued by IRDA must be attached to the Application-Cum-Bidding Form. Failing this, our
Company reserves the right to reject any Bid without assigning any reasons thereof.
The exposure norms for insurers, prescribed under the Insurance Regulatory and Development Authority
(Investment) Regulations, 2000 (the ‘IRDA Investment Regulations’), are broadly set forth below:
1.
Equity shares of a company: The least of 10% of the investee company’s subscribed capital (face
value) or 10% of the respective fund in case of life insurer or 10% of investment assets in case of
general insurer or reinsurer;
The entire group of the investee company: the least of 10% of the respective fund in case of a life
insurer or 10% of investment assets in case of a general insurer or reinsurer (25% in case of ULIPS);
and
2.
The industry sector in which the investee company operates: 10% of the insurer’s total investment
exposure to the industry sector (25% in case of ulips).
Bids by Banking Companies
The investment limit for banking companies as per the Banking Regulation Act, 1949, as amended, is
30% of the paid-up share capital of the investee company or 30% of the banks’ own paid-up share capital
and reserves, whichever is less (except in case of certain specified exceptions, such as setting up or
investing in a subsidiary company, which requires RBI approval). Additionally, any investment by a bank
212
in the Equity Shares must be approved by such bank’s investment committee set up to ensure
compliance with the applicable prudential norms for classification, valuation and operation of investment
portfolio of banks (currently reflected in the RBI Master Circular of July 1, 2011). Banking companies
can participate in the Issue only through the ASBA process.
Bids under Power of Attorney
In case of Bids (including ASBA Bids) made pursuant to a power of attorney or by limited companies,
corporate bodies, registered societies, FIIs, Mutual Funds, insurance companies and provident funds with
minimum corpus of ` 2,500 Lacs (subject to applicable law) and pension funds with a minimum corpus of
` 2,500 Lacs a certified copy of the power of attorney or the relevant resolution or authority, as the case
may be, along with a certified copy of the memorandum and articles of association and/or bye laws must
be lodged along with the Bid-cum-Application Form. Failing this, our Company reserves the right to
accept or reject any Bid in whole or in part, in either case, without assigning any reason.
In addition to the above, certain additional documents are required to be submitted by the following
entities, failing which, our Company reserves the right to accept or reject any Bid in whole or in part, in
either case, without assigning any reason:
1.
With respect to Bids by FIIs, VCFs, FVCIs and Mutual Funds, a certified copy of their SEBI
registration certificate must be lodged along with the Bid-cum-Application Form or the ASBA Bid-cumApplication Form as applicable. Failing this, our Company reserves the right to accept or reject any
Bid, in whole or in part, in either case without assigning any reasons thereof.
2.
With respect to Bids by insurance companies registered with the Insurance Regulatory and
Development Authority, in addition to the above, a certified copy of the certificate of registration
issued by the Insurance Regulatory and Development Authority must be lodged along with the Bidcum-Application Form or the ASBA Bid-cum-Application Form applicable. Failing this, our Company
reserves the right to accept or reject any Bid, in whole or in part, in either case without assigning any
reasons thereof.
3.
With respect to Bids made by provident funds with a minimum corpus of ` 2,500 Lacs (subject to
applicable law) and pension funds with a minimum corpus of ` 2,500 Lacs, a certified copy of a
certificate from a chartered accountant certifying the corpus of the provident fund/pension fund must
be lodged along with the Bid-cum-Application Form or the ASBA Bid-cum-Application Form as
applicable. Failing this, our Company reserves the right to accept or reject such bid, in whole or in
part, in either case without assigning any reasons thereof.
Our Company, in its absolute discretion, reserve the right to relax the above condition of simultaneous
lodging of the power of attorney along with the Bid-cum-Application Form, subject to such terms and
conditions that our Company and the Book Running Lead Manager may deem fit. Our Company in its
absolute discretion, reserves the right to permit the holder of the power of attorney to request the
Registrar that for the purpose of printing particulars on the refund order and mailing of the refund
order/CANs/allocation advice, the demographic details given on the Bid-cum-Application Form should be
used (and not those obtained from the Depository of the Bidder). In such cases, the Registrar shall use
demographic details as given in the Bid-cum-Application Form instead of those obtained from the
depositories.
The above information is given for the benefit of the Bidders. Our Company, its Directors, officers,
the Book Running Lead Manager are not liable for any amendments or modification or changes in
applicable laws or regulations, which may occur after the date of the Red Herring Prospectus.
Bidders are advised to make their independent investigations and ensure that any Bid from them
does not exceed the investment limits or maximum number of Equity Shares that can be held by
them under applicable law or regulation or as specified in the Red Herring Prospectus. Our
Company and the Book Running Lead Manager do not accept any responsibility for the
completeness and accuracy of the information stated above.
213
Bids and revision of Bids by Non-Residents, NRIs, FIIs and Foreign Venture Capital Funds
registered with SEBI on a repatriation basis.
Bids and revision to Bids must be made in the following manner:
1.
On the prescribed Bid-cum-Application Form or the Revision Form, as applicable ([] in colour), and
completed in full in BLOCK LETTERS in ENGLISH in accordance with the instructions contained
therein.
2. In a single name or joint names (not more than three and in the same order as their Depositary
Participant details).
3. Bids on a repatriation basis shall be in the names of individuals, or in the name of FIIs but not in the
names of minors, OCBs, firms or partnerships, foreign nationals (excluding NRIs) or their
nominees. Bids by Eligible NRIs for a Bid Amount of up to ` 2,00,000 would be considered under
the Retail Portion for the purposes of allocation and Bids for a Bid Amount of more than `
2,00,000 would be considered under Non- Institutional Portion for the purposes of allocation.
Maximum and Minimum Bid Size
For Retail Individual Bidders: The Bid must be for a minimum of [] Equity Shares and in multiples of
[] Equity Shares thereafter, subject to maximum Bid amount of ` 2,00,000. In case of revision of Bids,
the Retail Individual Bidders have to ensure that the Bid Amount does not exceed ` 2,00,000. In case the
maximum Bid amount is more than ` 2,00,000, due to a revision in the Bid or a revision in the Price Band
or on exercise of the option to bid at Cut-off Price, then the same would be considered for allocation
under the Non-Institutional Bidders category. The Cut-off option is given only to the Retail Individual
Bidders indicating their agreement to Bid and to acquire the Equity Shares at the final Issue Price as
determined at the end of the Book Building Process.
For Non-Institutional Bidders and QIB Bidders: The Bid must be for a minimum of such Equity Shares
such that the Bid Amount exceeds ` 2,00,000 and in multiples of [] Equity Shares thereafter. A Bid
cannot be submitted for more than the size of the Issue. However, the maximum Bid by a QIB should not
exceed the investment limits prescribed for them by the regulatory or statutory authorities governing
them. Under SEBI ICDR Regulations, a QIB Bidder cannot withdraw its Bid after the Bid/Issue Closing
Date and is required to pay the entire Bid Amount upon submission of Bid. The Company may close the
Bid/Issue Period for QIBs one working day prior to the Bid/Issue Closing Date. Accordingly, QIB
Investors will not be allowed to withdraw their bids after Bid/Issue Closing Date or one Working
Date prior to the Bid/Issue Closing Date as may be applicable.
In case of revision of Bids, the Non Institutional Bidders who are individuals have to ensure that the Bid
Amount is greater than ` 2,00,000 for being considered for allocation in the Non-Institutional category. In
case the Bid Amount reduces to ` 2,00,000 or less due to a revision in Bids or revision of the Price Band
Bids by Non-Institutional Bidders who are eligible for allocation in the Retail Portion would be considered
for allocation under the Retail Portion. Non Institutional Bidders and QIB Bidders are not allowed to Bid at
‘Cut-Off’. A QIB Bidder cannot withdraw its Bid after the Bid Closing Date.
Non – retail Investors i.e. QIBs and Non Institutional Investors who intend to participate in the
Issue are mandatorily required to submit their Bids through the ASBA facility.
Information for the Bidders
1.
Our Company shall, pursuant to the filing of the Draft Red Herring Prospectus with SEBI, make a
public announcement in English and a Hindi national newspaper and in a Gujarati newspaper with
wide circulation. This public announcement, subject to the provisions of Section 60 of the Companies
Act, shall invite public to give their comments to SEBI in respect of disclosures made in the Draft Red
Herring Prospectus.
214
2.
Our Company, in consultation with the Book Running Lead Manager shall declare the Bid/Issue
Opening Date and the Bid/Issue Closing Date (and the date on which our Company may decide to
close the Bids for the QIBs) in the Red Herring Prospectus to be registered with the RoC and also
publish the same in two national newspapers (one each in English and Hindi) and in one Gujarati
newspaper with wide circulation. This advertisement shall be in the prescribed format.
3.
The Price Band and the minimum bid lot as decided by our Company in consultation with the Book
Running Lead Manager, including the relevant financial ratios computed for both the Cap Price and
the Floor Price shall be published at least two (2) Working Days prior to the Bid/Issue Opening by our
Company an English and a Hindi national newspaper and in one Gujarati newspaper with wide
circulation.
4.
Our Company will file the Red Herring Prospectus with the RoC at least three (3) days prior to the
Bid/ Issue Opening Date.
5.
The members of the Syndicate and the SCSBs, as applicable will circulate copies of the Red Herring
Prospectus along with the Bid-cum-Application Form to potential investors. The SCSBs shall ensure
that the electronic ASBA Bid-cum-Application Form and the abridged prospectus are made available
on their respective websites.
6.
Copies of ASBA Bid-cum-Application Forms will be available for downloading and printing, from
website of the Stock Exchanges (which provide electronic interface for ASBA facility). A unique
application number will be generated for every ASBA Bid-cum-Application Form downloaded and
printed from the websites of the Stock Exchanges.
7.
Any Bidder (who is eligible to invest in our Equity Shares) who would like to obtain the Red Herring
Prospectus and/or the Bid-cum-Application Form can obtain the same from the Registered Office of
our Company or from the Book Running Lead Manager/Syndicate Members.
8.
Eligible Bidders who are interested in subscribing to the Equity Shares should approach the Book
Running Lead Manager or Syndicate Members or their authorized agent(s) or the SCSBs (as
applicable) to register their Bid. Bidders can also approach the Designated Branches of the SCSBs
(only in the specified cities) to register their Bids under the ASBA process.
9.
The Bids should be submitted on the prescribed Bid cum Application Form only. Bid cum Application
Forms should bear the stamp of the members of the Syndicate, otherwise they will be rejected.
Further, such broker or SCSB branch shall affix its stamp, date and time on the Bid cum Application
Form acknowledging the upload of the Bid in the electronic bidding system of the Stock Exchanges.
Bid Cum Application Forms by ASBA Bidders submitted directly to the SCSBs should bear the stamp
of the SCSBs and/or the Designated Branch and/or the Syndicate Member in the Specified Cities, if
not, the same are liable to be rejected. Bids by ASBA Bidders shall be accepted by the Designated
Branches of the SCSBs in accordance with the SEBI Regulations and any circulars issued by SEBI in
this regard. Bidders applying through the ASBA process also have an option to submit the Bid cum
Application Form in electronic form or submit Bids through the Syndicate in the Specified Cities.
10.
The Bid cum Application Form can be submitted (i) in physical mode, to a Syndicate Member in the
Specified Cities; or (ii) either in physical or electronic mode, to the SCSBs with whom the ASBA
Account is maintained. ASBA Bidder may submit Bid cum Application Form in electronic mode only to
the SCSBs with whom the ASBA Account is maintained and not to the Syndicate Members. SCSBs
may provide the electronic mode of bidding either through an internet enabled bidding and banking
facility or such other secured, electronically enabled mechanism for bidding and blocking funds in the
ASBA Account.
11.
ASBA Bidders bidding through a Syndicate Member should ensure that the Bid cum Application Form
is submitted to a Syndicate Member only in the Specified Cities. ASBA Bidders should also ensure
that the Bid cum Application Forms submitted to the Syndicate Members in the Specified Cities will
215
not be accepted if the SCSB where the ASBA Account, as specified in the Bid cum Application Form,
is maintained has not named at least one branch at that location for the members of the Syndicate to
deposit Bid cum Application Forms (A list of such branches is available at
http://www.sebi.gov.in/cms/sebi_data/attachdocs/1329804293371.html). ASBA Bidders bidding
directly through the SCSBs should ensure that the Bid cum Application Form is submitted to a
Designated Branch of a SCSB where the ASBA Account is maintained.
12.
For ASBA Bids submitted to the Syndicate Members in the Specified Cities, the Syndicate Member
shall upload the ASBA Bid onto the electronic bidding system of the Stock Exchanges and deposit the
Bid cum Application Form with the relevant branch of the SCSB, at the relevant Specified City, named
by such SCSB to accept such Bid cum Application Forms from the Syndicate Members (A list of such
branches is available at http://www.sebi.gov.in/cms/sebi_data/attachdocs/1329804293371.html). The
relevant branch of the SCSB shall block an amount in the ASBA Account equal to the Bid Amount
specified in the Bid cum Application Form. For ASBA Bids submitted directly to the SCSBs, the
relevant SCSB shall block an amount in the ASBA Account equal to the Bid Amount specified in the
Bid cum Application Form, before entering the ASBA Bid into the electronic bidding system
13.
Bidding by QIBs may close one day prior to the Bid Closing Date, provided that Bidding shall be kept
open for a minimum of three Working Days for all other categories of Investors. Our Company’s
decision to close bidding QIBs one day prior to the Bid/Issue Closing date, if any, shall be disclosed in
the RHP to be filed with RoC.
14.
The Price Band has been fixed at ` [] to ` [] per Equity Share. The Bidders can Bid at any price
within the Price Band, in multiples of [] Equity Shares. In accordance with the SEBI ICDR
Regulations, our Company, in consultation with the Book Running Lead Manager, reserves the right
to revise the Price Band during the Bid/Issue period. The cap on the Price Band will not be more than
120% of the floor of the Price Band. Subject to compliance with the immediately preceding sentence,
the floor of the Price Band can move up or down to the extent of 20% of the floor of the Price Band.
15.
Our Company in consultation with the Book Running Lead Manager shall finalise the Issue Price
within the Price Band, without the prior approval of, or intimation to, the Bidders.
16.
In case the Price Band is revised, the Bid/Issue period shall be extended, by an additional three days,
subject to the total Bid/Issue period not exceeding ten (10) Working Days. The revised Price Band
and Bid/Issue period, if applicable, will be widely disseminated by notification to the Stock Exchanges,
and by publishing in two national daily newspapers (one each in English and Hindi) and one regional
daily language newspaper, with wide circulation in the place where our Registered Office is situated
and also by indicating the change on the website of the Book Running Lead Manager and at the
terminals of the members of the Syndicate.
17.
Bid-cum-Application Forms will also be available on BSE and NSE websites.
18.
Except for Bids by or on behalf of the Central or State Government and the officials appointed by the
courts and by investors residing in the State of Sikkim, the Bidders, or in the case of a Bid by Bidders
jointly, first Bidder should mention his/her PAN allotted under the Income Tax Act. In accordance with
the SEBI Regulations, the PAN would be the sole identification number for participants transacting in
the securities market, irrespective of the amount of transaction. Any Bid cum Application Form without
the PAN is liable to be rejected. With effect from August 16, 2010, the beneficiary accounts of Bidders
for whom PAN details have not been verified will be “suspended for credit” by the Depositories, and
no credit of Equity Shares pursuant to the Offer will be made in the accounts of such Bidders.
The applicants may note that in case the DP ID and Client ID and PAN mentioned in the Bid-cumApplication Form, ASBA Bid-cum-Application Form and entered into the electronic bidding
system of the Stock Exchanges by the Syndicate do not match with the DP ID and Client ID and
PAN available in the Depository database, the application is liable to be rejected.
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General Instructions
Do’s:
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
Check if you are eligible to apply as per the terms of the Red Herring Prospectus and under
applicable laws, rules and regulations;
Read all the instructions carefully and complete the Bid-cum-Application Form/ ASBA Bid-cumApplication Form;
Ensure that the details about PAN, Depository Participant and beneficiary account are correct
and the beneficiary account is activated as allotment of Equity Shares will be in the
dematerialised form only;
Ensure that the bank account details are entered only in the space provided specifically for this
purpose. Bids submitted which do not have the bank details are liable to be rejected;
Ensure that the Bids are submitted at the Bidding centers only on forms bearing the stamp of a
member of the Syndicate or the SCSB in case of ASBA Bidders (except in case of electronic
ASBA Bid cum Application Forms); In case you are a Bidder other than an ASBA Bidder, ensure
that your Bid is submitted at the bidding center only on a form bearing the stamp of a member of
the Syndicate. In case you are an ASBA Bidder, the Bid should be submitted to a Designated
Branch of an SCSB/ Syndicate member (at ASBA Bidding Locations), with which the ASBA
Bidder or a person whose bank account will be utilized by the ASBA Bidder for bidding has a
bank account and not to the Bankers to the Issue or collecting banks (assuming that such
collecting banks are not SCSBs), the Company or the Registrar. With respect to ASBA Bids,
ensure that you use the ASBA Bid-cum-Application Form specified for this purpose, and that such
form is signed by the account holder in case the applicant is not the account holder. Ensure that
you have mentioned the correct bank account number in the ASBA Bid-cum-Application Form;
Ensure that you have requested for and received a Transaction Registration Slip (TRS) for your
Bid cum Application Form or Revision Form;
Ensure that you have funds equal to the Bid Amount in your bank account maintained with the
SCSB before submitting the ASBA Bid-cum-Application Form;
QIBs and Non Institutional Bidders should submit their Bids through the ASBA process only;
Ensure that the full Bid Amount is paid for the Bids submitted to the members of the Syndicate
and funds equivalent to the Bid Amount are blocked in case of any Bids submitted though the
SCSBs;
Submit revised Bids to the same member of the Syndicate through whom the original Bid was
placed and obtain a revised TRS;
Submit revised Bids to the same member of the Syndicate or Designated Branch of the SCSB
through whom the original Bid was placed and obtain a revised TRS/acknowledgement;
Ensure that the Bid is within the Price Band;
Except for Bids (i) on behalf of the Central or State Governments and the officials appointed by
the courts, who, in terms of a SEBI circular dated June 30, 2008, may be exempt from specifying
their PAN for transacting in the securities market, and (ii) Bids by persons resident in the state of
Sikkim, who, in terms of a SEBI circular dated July 20, 2006, may be exempted from specifying
their PAN for transacting in the securities market, all Bidders should mention their PAN allotted
under the Income Tax Act, 1961. The exemption for the Central or State Government and officials
appointed by the courts and for investors residing in the State of Sikkim is subject to (a) the
demographic details received from the respective depositories confirming the exemption granted
to the beneficiary owner by a suitable description in the PAN field and the beneficiary account
remaining in “active status”; and (b) in the case of residents of Sikkim, the address as per the
demographic details evidencing the same;
Ensure that the Demographic Details (as defined herein below) are updated, true and correct in
all respects.
Ensure that the Depository Participant identification number (DP ID), the client identification
number (Client ID) and PAN mentioned in the Bid-cum-Application Form/ASBA Bid-cumApplication Form and entered into the electronic bidding system of the Stock Exchanges by the
Syndicate Members or Designated Branches of the SCSBs, as the case may be, matches with
the DP ID, Client ID and PAN available in the Depository database. The Bidders should note that
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16.
17.
18.
in case the DP ID, Client ID and the PAN mentioned in their Bid-cum-Application Form/ASBA Bidcum-Application Form and entered into the electronic bidding system of the Stock Exchanges by
the Syndicate Members or the Designated Branches of the SCSBs, as the case may be, do not
match with the DP ID, Client ID and PAN available in the Depository database, then such Bids
are liable to be rejected.
Ensure that the name(s) given in the Bid-cum-Application Form is exactly the same as the
name(s) in which the beneficiary account is held with the Depository Participant. In case the Bidcum-Application Form is submitted in joint names, ensure that the beneficiary account is also held
in same joint names and such names are in the same sequence in which they appear in the Bidcum-Application Form.
Where the Bid-cum-Application Form/ASBA Bid-cum-Application Form is submitted in joint
names, ensure that the beneficiary account is also held in the same joint names and such names
are in the same sequence in which they appear in the Bid-cum-Application Form/ASBA Bid-cumApplication Form.
Ensure that thumb impressions and signatures other than in the languages specified in the Eighth
Schedule to the Constitution of India are attested by a Magistrate or a Notary Public or a Special
Executive Magistrate under official seal.
In addition, ASBA Bidders should ensure that:
1. The ASBA Bid-cum-Application Form is signed by the account holder in case the applicant is not the
account holder;
2. The correct bank account numbers have been mentioned in the ASBA Bid-cum-Application Form;
3. The authorization box in the ASBA Bid-cum-Application Form has been correctly checked, or an
authorization to the SCSB through the electronic mode has been otherwise provided, for the
Designated Branch to block funds equivalent to the Bid Amount mentioned in the ASBA Bid-cumApplication Form in the ASBA Account maintained with a branch of the concerned SCSB; and
4. An acknowledgement from the Designated Branch of the concerned SCSB or the Syndicate/ subsyndicate member in designated cities for the submission of the ASBA Bid-cum-Application Form
has been obtained.
Don’ts:
1. Do not Bid for lower than the minimum Bid size;
2. Do not Bid/ revise Bid price to less than the lower end of the Price Band or higher than the higher end
of the Price Band;
3. Do not Bid on another Bid-cum-Application Form after you have submitted a Bid to the member of the
Syndicate or the SCSB;
4. Do not pay the Bid amount in cash, by money order or by postal order or by stockinvest and in
relation to ABSA Bidders in any other mode other than blocked amounts in the bank accounts
maintained by SCSBs;
5. Do not send Bid cum Application Forms by post; instead submit the same to a member of the
Syndicate or Designated Branch of the SCSB, as applicable;
6. Do not provide your GIR number instead of your PAN number as the Bid is liable to be rejected on
this ground;
7. Do not Bid at Cut-Off price (for QIBs and Non-Institutional Bidders);
8. Do not Bid for a Bid Amount exceeding ` 2,00,000 (for Bids by Retail Individual Bidders);
9. Do not fill up the Bid-cum-Application Form such that the Equity Shares bid for exceeds the Issue size
and/ or investment limit or maximum number of Equity Shares that can be held under the
applicable laws or regulations or maximum amount permissible under the applicable regulations
or under the terms of the Draft Red Herring Prospectus;
10. Do not Bid if you are prohibited from doing so under the law of your local jurisdiction;
11. Do not submit more than five (5) ASBA Bid-cum-Application Forms per bank account for the Issue;
12. Do not submit the Bid without payment of the entire Bid Amount;
13. Do not submit incorrect details of DP ID, Client ID and PAN or give details for which demat account
are suspended or for which such details cannot be verified by the Registrar; and
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Bids and revisions of Bids must be:
1. Made only in the prescribed Bid-cum-Application Form or Revision Form, as applicable;
2. Completed in full, in BLOCK LETTERS in ENGLISH and in accordance with the instructions
contained here, in the Bid cum Application Form or in the Revision Form. Bidders must provide
details of valid and active DP-ID, client ID and PAN clearly and without error. Invalid accounts,
suspended accounts or where such account is classified as invalid or suspended may not be
considered for Allotment. Incomplete Bid cum Application Forms, Revision Forms or ASBA Bid cum
Application Form, or Revision Forms or in the ASBA Revision Form are liable to be rejected. Bidders
should note that the members of the Syndicate and/or the SCSBs (as appropriate) will not be liable
for errors in data entry due to incomplete or illegible Bid cum Application Forms or Revision Forms.
3. Information provided by the Bidders will be uploaded in the online IPO system by the members of
the Syndicate and SCSBs, as the case may be, and the electronic data will be used to make
allocation/Allotment. Please ensure that the details are correct are legible;
4. The Bids from the Retail Individual Bidders must be for a minimum of [] Equity Shares and in
multiples of [] thereafter subject to a maximum Bid amount of ` 2,00,000. In case the Bid Amount is
over ` 2,00,000 due to revision of the Bid or revision of the Price Band or on exercise of Cut-off
option, the Bid would be considered for allocation under the Non-Institutional Bidders portion;
5. The option to Bid at Cut-off Price is an option given only to the Retail Individual Bidders submitting
Bids indicating their agreement to Bid;
6. For Non-institutional and QIB Bidders, Bids must be for a minimum Bid Amount of ` 2,00,000 and in
multiples of [] Equity Shares thereafter. All Individual Bidders whose maximum bid amount exceeds
` 2,00,000 would be considered under this category. Bids cannot be made for more than the Issue
Size. Bidders are advised to ensure that a single Bid from them should not exceed the investment
limits or maximum number of Equity Shares that can be held by them under the applicable laws or
regulations;
7. In single name or in joint names (not more than three and in the same order as their Depository
Participant details);
8. Thumb impressions and signatures other than in the languages specified in the Eighth Schedule in
the Constitution of India must be attested by a Magistrate or a Notary Public or a Special Executive
Magistrate under official seal;
9. Bids by Non Residents, NRIs and FIIs, FVCIs, multilateral and bilateral development financial
institutions on a repatriation basis shall be in the names of individuals, or in the names of FIIs, FVCIs
multilateral and bilateral development financial institutions but not in the names of minors, OCBs,
firms or partnerships, foreign nationals (excluding NRIs) or their nominees;
Method and Process of Bidding
1.
Our Company and the Book Running Lead Manager shall declare the Bid Opening Date and Bid
Closing Date (including the date on which Bidding shall be closed for QIBs) at the time of filing the
Red Herring Prospectus with the RoC and shall also publish it in an English and a Hindi national
newspaper and in one Gujarati newspaper with wide circulation at least two (2) Working Days prior to
the Bid Opening Date. This advertisement, subject to the provisions of Section 66 of the Companies
Act, shall contain the disclosure requirements as specified under Schedule XIII of the SEBI ICDR
Regulations;
2.
Our Company shall, in consultation with the Book Running Lead Manager, decide the Price Band and
the minimum Bid lot size for the Issue and the same shall be advertised in one English national daily,
one Hindi national daily and one Gujarati daily newspaper with wide circulation at least two (2)
Working Days prior to the Bid/ Issue Opening Date. The Syndicate and the SCSBs shall accept Bids
from the Bidders during the Bid/Issue Period in accordance with the terms of the Syndicate
Agreement;
3.
The Bid/Issue Period shall be a minimum of three Working Days and not exceeding ten Working
Days. In case the Price Band is revised, the revised Price Band and Bidding Period will be published
219
in one English national daily, one Hindi national daily and one Gujarati daily newspaper with wide
circulation and the Bid/Issue Period may be extended, if required, by at least an additional three
Working Days, subject to the total Bid/Issue Period not exceeding ten Working Days. Any revision in
the Price Band and the revised Bid/ Issue Period, if applicable, will be published in two national
newspapers (one each in English and Hindi) and one Gujarati newspaper with wide circulation and
also by indicating the change on the websites of Book Running Lead Manager and at the terminals of
the members of the Syndicate.
4.
Each Bid-cum-Application Form will give the Bidder the choice to bid for up to three optional prices
(for details refer to the paragraph entitled “Bids at Different Price Levels” below) and specify the
demand (i.e. the number of Equity Shares bid for) in each option. The price and demand options
submitted by the Bidder in the Bid-cum-Application Form and/or ASBA Bid-cum-Application Form will
be treated as optional demands from the Bidder and will not be cumulated. After determination of the
Issue Price, the maximum number of Equity Shares bid for by a Bidder at or above the Issue Price
will be considered for allocation and the rest of the Bid(s), irrespective of the Bid Price, will become
automatically invalid;
5.
The Bidder cannot Bid on another Bid-cum-Application Form after his or her Bids on one Bid-cumApplication Form have been submitted to any member of the Syndicate or the SCSBs. Submission of
a second Bid-cum-Application Form to either the same or to another member of the Syndicate or
SCSBs will be treated as multiple Bids and is liable to be rejected either before entering the Bid into
the electronic bidding system, or at any point of time prior to the allocation or allotment of Equity
Shares in this Issue. However, the Bidder can revise the Bid through the Revision Form, the
procedure for which is detailed under the paragraph titled “Build up of the Book and Revision of Bids”;
6.
The Members of the Syndicate/SCSBs will enter each Bid option into the electronic bidding system as
a separate Bid and generate a TRS, for each price and demand option and give the same to the
Bidder. Therefore, a Bidder can receive up to three TRSs for each Bid-cum-Application Form. With
respect to the ASBA Bid-cum-Application Forms collected by any member of the Syndicate, the
Syndicate Member will issue an acknowledgement by giving the counter foil of the ASBA Bid-cumApplication Form to the ASBA Bidder. The TRS will be generated by the concerned SCSB after
blocking of funds;
7.
Along with the Bid-cum-Application Form, all Bidders (other than ASBA Bidders) will make payment in
the manner described under the paragraph titled ‘Payment Instructions’ under section titled “Issue
Procedure” beginning on page number 205 of the Draft Red Herring Prospectus;
8.
Upon receipt of the ASBA Bid-cum-Application Form, submitted whether in physical or electronic
mode, the Designated Branch of the SCSB shall verify if sufficient funds equal to the Bid Amount are
available in the ASBA Account, as mentioned in the ASBA Bid-cum-Application Form, prior to
uploading such Bids with the Stock Exchanges;
9.
If sufficient funds are not available in the ASBA Account, the Designated Branch of the SCSB shall
reject such Bids and shall not upload such Bids with the Stock Exchanges;
10.
If sufficient funds are available in the ASBA Account, the SCSB shall block an amount equivalent to
the Bid Amount mentioned in the ASBA Bid-cum-Application Form and will enter each Bid option into
the electronic bidding system as a separate Bid and generate a TRS for each price and demand
option. The TRS shall be furnished to the ASBA Bidder on request; and
11.
The identity of QIB Bidders shall not be made public which shall be published on the websites of the
Stock Exchanges.
INVESTORS ARE ADVISED NOT TO SUBMIT THE BUD-CUM-APPLICATION FORMS TO THE
ESCROW COLLECTION BANKS. BIDS SUBMITTED TO THE ESCROW COLLECTION BANKS
SHALL BE REJECTED AND SUCH BIDDERS SHALL NOT BE ENTITLED TO ANY COMPENSATION
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ON ACCOUNT OF SUCH REJECTION.
Bids at Different Price Levels
The Bidders can Bid at any price within the Price Band, in multiples of ` [].
1. Our Company shall, in consultation with the Book Running Lead Manager, decide the Price Band and
the minimum Bid lot size for this Issue and the same shall be advertised in one English national daily,
one Hindi national daily and one Gujarati daily newspaper with wide circulation at least two Working
Days prior to the Bid/ Issue Opening Date. The Syndicate and the SCSBs shall accept Bids from the
Bidders during the Bid/Issue Period. In accordance with SEBI ICDR Regulations, our Company, in
consultation with the Book Running Lead Manager reserve the right to revise the Price Band during
the Bid/Issue Period, provided the Cap Price shall be less than or equal to 120% of the Floor Price
and the Floor Price shall not be less than the face value of the Equity Shares. The revision in Price
Band shall not exceed 20% on the either side i.e. the floor price can move up or down to the extent of
20% of the floor price disclosed at least two days prior to the Bid/ Issue Opening Date and the Cap
Price will be revised accordingly.
2. Our Company in consultation with the Book Running Lead Manager can finalise the Issue Price within
the Price Band in accordance with this clause, without the prior approval of, or intimation, to the
Bidders.
3. Bidders can bid at any price within the Price Band. Bidders have to Bid for the desired number of
Equity Shares at a specific price. Retail Individual Bidders applying for a maximum Bid in any of the
bidding options not exceeding ` 2,00,000 may bid at Cut-off Price. However, bidding at Cut-off Price
is prohibited for QIBs and Non-Institutional Bidders and such Bids from QIBs and Non Institutional
Bidders shall be rejected.
4. Retail Individual Bidders who Bid at the Cut-off Price agree that they shall acquire the Equity Shares
at any price within the Price Band. Retail Individual Bidders bidding at Cut-off Price shall deposit the
Bid Amount based on the Cap Price in the respective Escrow Accounts. In the event the Bid Amount
is higher than the subscription amount payable by the Retail Individual Bidders who Bid at Cut-off
Price, (i.e. the total number of Equity Shares allocated in the Issue multiplied by the Issue Price) the
Retail Individual Bidders, who Bid at Cut-off Price, shall receive the refund of the excess amounts
from the respective Escrow Accounts/refund account(s). In case of ASBA Bidder bidding at Cut-off
Price, the ASBA Bidders shall instruct the SCSBs to block amount based on the Cap Price.
5. In case of an upward revision in the Price Band announced as above, Retail Individual Bidders who
had bid at Cut-Off Price could either (i) revise their Bid or (ii) make additional payment based on the
cap of the revised Price Band, with the members of the Syndicate or the SCSBs to whom the original
Bid was submitted. In case the total amount (i.e. original Bid Amount plus additional payment)
exceeds ` 2,00,000, the Bid will be considered for allocation under the Non Institutional category in
terms of the Draft Red Herring Prospectus. If, however, the Bidder does not either revise the Bid or
make additional payment and the Issue Price is higher than the cap of the Price Band prior to
revision, the number of Equity Shares Bid for shall be adjusted for the purpose of allocation, such that
no additional payment would be required from the Bidder and the Bidder is deemed to have approved
such revised Bid at Cut-off.
6. In case of a downward revision in the Price Band, Retail Individual Bidders who have bid at Cut-off
Price could either revise their Bid or the excess amount paid at the time of bidding would be refunded
from the respective Escrow Accounts/refund account(s) or unblocked by the SCSBs, as applicable.
7. Our Company, in consultation with the Book Running Lead Manager, shall decide the minimum
number of Equity Shares for each Bid to ensure that the minimum application value is within the
range of ` [] to ` [].
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8. When a Bidder has revised his or her Bid, he or she shall surrender the earlier TRS and get a revised
TRS from the members of the Syndicate. It is the Bidder’s responsibility to request for and obtain the
revised TRS, which will act as proof of revision of the previous Bid.
9. Any revision of the Bid shall be accompanied by payment in the form of cheque or demand draft for
the incremental amount, if any, to be paid on account of the upward revision of the Bid. With respect
to the Bids by ASBA Bidders, if revision of the Bids results in an incremental amount, the relevant
SCSB shall block the additional Bid Amount. In case of Bids, other than ASBA Bids, the Syndicate
shall collect the payment in the form of cheque or demand draft if any, to be paid on account of the
upward revision of the Bid. In such cases, the Syndicate will revise the earlier Bids details with the
revised Bid and provide the cheque or demand draft number of the new payment instrument in the
electronic book. The Registrar will reconcile the Bid data and consider the revised Bid data for
preparing the Basis of Allotment.
10.
When a Bidder revises his or her Bid, he or she should surrender the earlier TRS and request for a
revised TRS from the Syndicate or the SCSB, as proof of his or her having revised the previous Bid.
PAYMENT INSTRUCTIONS
Escrow Mechanism for Retail individual Bidders other than ASBA Bidders and payment into the
Escrow Account
Pursuant to SEBI circular bearing number CIR/CFD/DIL/1/2011 dated April 29, 2011 non- retail
Investors are mandatorily required to utilise the ASBA facility to participate in the Issue.
Our Company and the Book Running Lead Manager shall open Escrow Account(s) with one or more
Escrow Collection Bank(s) in whose favour the Bidders shall make out the cheque or demand draft in
respect of his or her Bid and/or revision of the Bid. Cheques or demand drafts received for the full Bid
Amount from Retail individual Bidders would be deposited in the Escrow Account.
The Escrow Collection Banks will act in terms of the Red Herring Prospectus, the Prospectus and the
Escrow Agreement to be entered into amongst our Company, the Book Running Lead Manager, Escrow
Bankers and Registrar to the Issue. The monies in the Escrow Account shall be maintained by the
Escrow Collection Bank(s) for and on behalf of the Bidders until the Designated Date. The Escrow
Collection Bank(s) shall not exercise any lien whatsoever over the monies deposited therein and shall
hold the monies therein in trust for the Bidders. On the Designated Date, the Escrow Collection Banks
shall transfer the monies from the Escrow Account to the Public Issue Account with the Bankers to the
Issue as per the terms of the Escrow Agreement. Payments of refunds to the Bidders shall also be made
from the Refund Account as per the terms of the Escrow Agreement and the Red Herring Prospectus.
The Bidders should note that the escrow mechanism is not prescribed by SEBI and has been
established as an arrangement between the Escrow Collection Bank(s), our Company, Registrar to
the Issue and Book Running Lead Manager to facilitate collection from the Bidders.
Payment mechanism for ASBA Bidders
Pursuant to SEBI circular bearing number CIR/CFD/DIL/1/2011 dated April 29, 2011 non- retail
Investors are mandatorily required to utilise the ASBA facility to participate in the Issue.
ASBA Bidders shall specify the bank account number in the ASBA Bid-cum-Application Form which is to
be submitted to the Syndicate member. The Syndicate member shall in turn forward the ASBA Bid-cumApplication Form to the SCSB for processing and the SCSB shall block an amount equivalent to the Bid
Amount in the bank account specified in the ASBA Bid-cum-Application Form. The SCSB shall keep the
Bid Amount in the relevant bank account blocked until withdrawal/rejection of the ASBA Bid or receipt of
instructions from the Registrar to unblock the Bid Amount. In the event of withdrawal or rejection of ASBA
Bid-cum-Application Form or for unsuccessful ASBA Bid-cum-Application Form, the Registrar shall give
222
instructions to the SCSB to unblock the application money in the relevant bank account within one
Working Day of receipt of such instruction. The Bid Amount shall remain blocked in the ASBA Account
until finalisation of the Basis of Allotment in this Issue and consequent transfer of the Bid Amount to the
Public Issue Account, or until withdrawal/failure of this Issue or until rejection of the ASBA Bid, as the
case may be.
In case of Bids by FIIs, a Special Rupee Account should be mentioned in the ASBA Bid-cum-Application
Form, for blocking funds, along with documentary evidence in support of the remittance.
Upon completing and submitting the ASBA Form to the Designated Branch, the ASBA Bidder is deemed
to have authorised our Company to make the necessary changes in the Red Herring Prospectus as
would be required for filing the Prospectus with the RoC and as would be required by RoC after such
filing without prior or subsequent notice of such changes to the ASBA Bidders.
Upon submission of an ASBA Bid-cum-Application Form with the SCSB, whether in physical or electronic
mode, each ASBA Bidder shall be deemed to have agreed to block the entire Bid Amount and authorized
the Designated Branch to block such Bid Amount in the ASBA Account. An ASBA Bid-cum-Application
Form should not be accompanied by cash, draft, money order, postal order or any mode of payment other
than blocked amounts in the ASBA Account.
After verifying that sufficient funds are available in the ASBA Account, the SCSB shall block an amount
equivalent to the Bid Amount mentioned in the ASBA Bid-cum-Application Form until the Designated
Date. On the Designated Date, the SCSBs shall transfer the amounts allocable to the ASBA Bidders from
the respective ASBA Accounts, in accordance with the SEBI ICDR Regulations, into the Public Issue
Account. The balance amount, if any, against any Bid in the ASBA Accounts shall then be unblocked by
the SCSBs on the basis of the instructions issued in this regard by the Registrar to the Issue.
Terms of Payment for Retail Individual Bidders other than ASBA Bidders and Payment into the
Escrow Account
Each Retail Individual Bidder who does not utilize the ASBA facility shall pay the full Bid Amount at the
time of the submission of the Bid-cum-Application Form, and shall, along with the submission of the Bidcum-Application Form, draw a cheque or demand draft in favour of the relevant Escrow Account of the
Escrow Collection Bank(s) (see “Payment in Escrow Accounts” below), and submit such cheque or
demand draft to the member of the Syndicate to whom the Bid is being submitted. Retail individual
Bidders may also provide the entire Bid Amount by way of an electronic transfer of funds through the
RTGS mechanism. Bid-cum-Application Forms accompanied by cash/stockinvest/money order/postal
order shall not be accepted.
The members of the Syndicate shall deposit the cheque or demand draft with the Escrow Collection
Bank(s), which will hold the monies for the benefit of the Retail individual Bidders until the Designated
Date. On the Designated Date, the Escrow Collection Bank(s) shall transfer the funds from the Escrow
Account, as per the terms of the Escrow Agreement, into the Public Issue Account. The balance amount
after transfer to the Public Issue Account of our Company shall be transferred to the Refund Account on
the Designated Date. No later than 12 Working Days from the Bid/Issue Closing Date, the Escrow
Collection Bank(s) shall also refund all amounts payable to unsuccessful Bidders and also the excess
amount paid on bidding, if any, after adjustment for Allotment, to the Bidders.
Where the Retail individual Bidder has been allotted a lesser number of Equity Shares than he or she had
Bid for, the excess amount paid on Bidding, if any, after adjustment for Allotment, will be refunded to such
Bidder within 12 Working Days from the Bid/Issue Closing Date. Our Company agrees that (i) the
Allotment of Equity Shares; and (ii) credit to the successful Bidders’ depositary accounts will be
completed within 12 Working Days of the Bid/Issue Closing Date. Our Company further agrees that it
shall pay interest at the rate of 15% p.a. if the Allotment letters or refund orders have not been
despatched to the applicants or if, in a case where the refund or portion thereof is made in electronic
manner, the refund instructions have not been given in the disclosed manner within 15 days from the
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Bid/Issue Closing Date, whichever is later.
Payment into Escrow Accounts
1. All Retail Individual Bidders who are not Bidding through ASBA facility would be required to pay the
entire Bid Amount at the time of the submission of the Bid-cum-Application Form.
2. The Retail Individual Bidders shall, with the submission of the Bid-cum-Application Form, draw a
payment instrument for the entire Bid Amount in favour of the Escrow Account(s) and submit the
same to the member of the Syndicate. If the payment is not made favouring the Escrow Account
along with the Bid-cum-Application Form, the Bid shall be rejected. Bid cum Application Forms
accompanied by cash, stockinvest, money order or postal order shall not be accepted.
3. The payment instruments for payment into the Escrow Account(s) should be drawn in favour of:
1.
2.
In case of Resident Retail Bidders: “[]”
In case of Non Resident Retail Bidders: “[]”
4. In case of Bids by Eligible Retail Individual NRIs applying on repatriation basis, the payments must be
made through Indian Rupee drafts purchased abroad or cheques or bank drafts, for the amount
payable on application remitted through normal banking channels or out of funds held in NRE
Accounts or FCNR Accounts, maintained with banks authorised to deal in foreign exchange in India,
along with documentary evidence in support of the remittance. Payment will not be accepted out of
NRO Account of Non-Resident Bidder bidding on a repatriation basis. Payment by drafts should be
accompanied by bank certificate confirming that the draft has been issued by debiting an NRE
Account or FCNR Account.
5. In case of Bids by Eligible Retail Individual NRIs applying on non-repatriation basis, the payments
must be made through Indian Rupee Drafts purchased abroad or cheques or bank drafts, for the
amount payable on application remitted through normal banking channels or out of funds held in NRE
Accounts or FCNR Accounts, maintained with banks authorised to deal in foreign exchange in India,
along with documentary evidence in support of the remittance or out of a NRO Account of a NonResident Bidder bidding on a non-repatriation basis. Payment by drafts should be accompanied by a
bank certificate confirming that the draft has been issued by debiting an NRE or FCNR or NRO
Account.
6. The monies deposited in the Escrow Account(s) will be held for the benefit of the Bidders till the
Designated Date.
7. On the Designated Date, the Escrow Collection Banks shall transfer the funds from the Escrow
Account(s) as per the terms of the Escrow Agreement and the Red Herring Prospectus into the
Public Issue Account and the surplus amount shall be transferred to the Refund Account.
8. Our Company agrees that (i) the Allotment of Equity Shares; and (ii) credit to the successful Bidders’
depositary accounts will be completed within 12 Working Days of the Bid/Issue Closing Date. Our
Company further agrees that it shall pay interest at the rate of 15% p.a. if the Allotment letters or
refund orders have not been despatched to the applicants or if, in a case where the refund or portion
thereof is made in electronic manner, the refund instructions have not been given in the disclosed
manner within 15 days from the Bid/Issue Closing Date, whichever is later.
9. Payments should be made by cheque, or demand draft drawn on any bank (including a cooperative
Bank), which is situated at, and is a member of or sub-member of the bankers’ clearing house
located at the centre where the Bid cum Application Form is submitted. Outstation cheques/bank
drafts drawn on banks not participating in the clearing process will not be accepted and applications
accompanied by such cheques or bank drafts are liable to be rejected. Cash, stockinvest, money
orders or postal orders will not be accepted.
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10. In case clear funds are not available in the Escrow Accounts as per final certificates from the Escrow
Collection Banks, such Bids are liable to be rejected.
11. Bidders are advised to mention the number of the Bid cum Application Form on the reverse of the
cheque/demand draft to avoid misuse of instruments submitted along with the Bid cum Application
Form.
12. Payments made through cheques without the Magnetic Ink Character Recognition (“MICR”) code will
be rejected.
Payment by Stock invest
In terms of Reserve Bank of India Circular Number DBOD No. FSC BC 42/24.47.001/2003-04 dated
November 5, 2003, the option to use the stock invest instrument in lieu of cheques or bank drafts for
payment of bid money has been withdrawn. Hence, payment through stockinvest would not be accepted
in this Issue.
Payment by cash/ money order
Payment through cash/ money order shall not be accepted in this Issue.
Submission of Bid-cum-Application Form
All Bid-cum-Application Forms or Revision Forms duly completed and accompanied by account payee
cheques or drafts shall be submitted to the members of the Syndicate at the time of submission of the
Bid. With respect to ASBA Bidders, the ASBA Bid-cum-Application Form or the ASBA Revision Form shall
be submitted to the Designated Branches of the SCSBs. No separate receipts shall be issued for the
money payable on the submission of Bid-cum-Application Form or Revision Form. However, the collection
centre of the members of the Syndicate will acknowledge the receipt of the Bid cum Application Form or
Revision Form by stamping and returning to the Bidder the acknowledgement slip. The acknowledgement
slip will serve as the duplicate of the Bid-cum-Application Form for the records of the Bidder.
Other Instructions
Joint Bids in the case of Individuals
Bids may be made in single or joint names (not more than three). In the case of joint Bids, all payments
will be made out in favour of the Bidder whose name appears first in the Bid-cum-Application Form/ASBA
Bid-cum-Application-Form or Revision Form (‘First Bidder’) as the case may be. All communications will
be addressed to the First Bidder and will be dispatched to his or her address as per the demographic
details received from the Depository or otherwise.
Multiple Bids
A Bidder should submit only one Bid (and not more than one) for the total number of Equity Shares
required. Two or more Bids will be deemed to be multiple Bids if the sole or First Bidder is one and the
same. Our Company reserves the right to reject, in its absolute discretion, all or any multiple Bids in any
or all categories.
In this regard, the procedures which would be followed by the Registrar to the Issue to detect multiple
applications are given below:
1.
All applications will be checked for common PAN and Bids with common PAN will be identified as
multiple unless they are from mutual funds for different schemes/plans or from portfolio managers
registered as such with SEBI seeking to invest under different schemes/plans.
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2.
In case of a Mutual Fund/ a SEBI registered portfolio managers, a separate Bid can be made in
respect of each scheme of the Mutual Funds/ scheme and such Bids in respect of more than one
scheme will not be treated as multiple Bids provided that the Bids clearly indicate the scheme for
which the Bid has been made. Bids by QIBs under the QIB Portion will not be considered as
multiple Bids.
Our Company in consultation with the Book Running Lead Manager reserves the right to reject, in their
absolute discretion, all or any multiple Bids in any or all categories.
After Bidding on an ASBA Bid-cum-Application Form either in physical or electronic mode, where such
ASBA has been submitted to the Designated Branches of SCSBs and uploaded with the Stock
Exchanges, an ASBA Bidder cannot Bid, either in physical or electronic mode, on another ASBA Bidcum-Application Form or a Bid-cum-Application Form. Submission of a second ASBA Bid-cum-Application
Form, to either the same or to another Designated Branch of the SCSB/member of the Syndicate or a
Bid-cum-Application Form, will be treated as multiple Bids and will be liable to be rejected either before
entering the Bid into the electronic bidding system, or at any point of time prior to the allocation or
Allotment of Equity Shares in this Issue. However, the ASBA Bidder can revise the Bid through the
Revision Form, the procedure for which is detailed in “Build up of the Book and Revision of Bids” below.
More than one ASBA Bidder may Bid for Equity Shares using the same ASBA Account, provided that the
SCSBs shall not accept a total of more than five ASBA Bid-cum-Application Forms from such ASBA
Bidders with respect to any single account. Our Company reserves the right to reject, in its absolute
discretion, all or any multiple Bids in any or all categories.
In this regard, the procedures which would be followed by the Registrar to the Issue to detect multiple
Bids are provided below:
1.
All Bids with the same name and age, as the case may be, will be accumulated and taken to a
separate process file which would serve as a multiple master.
2.
A check will be carried out for the same PAN. In cases where the PAN is same, such Bids will be
treated as multiple Bids.
3.
Further, in the case of Mutual Fund Bidders and FII sub-accounts, Bids which use the same PAN, the
Bid-cum-Application Forms will be scrutinised for DP ID and Beneficiary Account Numbers. In case
such Bid-cum-Application Forms bear the same DP ID and Beneficiary Account Numbers, these will
be treated as multiple applications.
4.
In cases where there are more than 20 valid applicants having a common address, such Equity
Shares Allotted in the Issue will be kept in abeyance, post-Allotment and released on confirmation of
KYC norms by the depositories.
Permanent Account Number (“PAN”)
The Bidder or in the case of a Bid in joint names, each of the Bidders, should mention his/her PAN
allotted under the I.T. Act. Applications without this information and documents will be considered
incomplete and are liable to be rejected. It is to be specifically noted that Bidders should not submit
the GIR number instead of the PAN as the Bid is liable to be rejected on this ground.
The demat accounts for Bidders for which PAN details have not been verified shall be “suspended
credit” and no credit of Equity Shares pursuant to the Issue shall be made into accounts of such
Bidders. SEBI ICDR Regulations stipulate that all applicants are required to disclose their PAN allotted
under the I.T. Act in the Bid-cum-Application Form (including the ASBA Form), irrespective of the amount
of the Bid. Applications in which PAN so allotted is not mentioned would be rejected. SEBI had issued a
circular directing that with effect from July 2, 2007, PAN would be the sole identifiable number for
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participants transacting in the securities market, irrespective of the amount of transaction.
Therefore, irrespective of the amount of the Bid, the Bidder or in the case of a Bid in joint names,
each of the Bidders should mention his/her PAN allotted under the I.T. Act.
Bid-cum-Application Form or the ASBA Bid-cum-Application Form without PAN number will be considered
incomplete and are liable to be rejected. In terms of SEBI Circular bearing no. MRD/DoP/Cir-20/2008
dated June 30, 2008, certain categories of investors (namely the Central Government, State Government,
and the officials appointed by the courts e.g. Official liquidator, Court receiver etc. (under the category of
Government) and residents of Sikkim for which submission of PAN is not mandatory) shall be exempted
from submitting their PAN, only if such organisations submit sufficient documentary evidence to support
the veracity of their claim for such exemption.
Unique Identification Number (“UIN”)
SEBI has, vide circular no. MRD/DoP/Cir- 05/2007 dated April 27, 2007, with effect from July 2, 2007
declared that the PAN would be the sole identification number for participants transacting in the securities
market, irrespective of the amount of transaction. Thus, the requirement of Unique Identification Number
(UIN) under the SEBI (Central Database of market Participants Regulations), 2005/circulars by SEBI has
been discontinued vide circular No. MRD/DoP/Cir- 08/2007 dated June 25, 2007.
Electronic Registration of Bids
1.
The members of the Syndicate and the SCSBs will register the Bids received using the online
facilities of the Stock Exchanges. There will be at least one online connectivity in each city, where the
Stock Exchanges are located in India and where such Bids are being accepted. An SCSB shall not
upload bids received through any ASBA in the electronic bidding system of the Stock Exchanges
unless:
1.
it has received the ASBA Bid-cum-Application Form in a physical or electronic form; and
2.
it has blocked the application money in the ASBA Account specified in the ASBA Bid-cumApplication Form or has systems to ensure that electronic ASBA Bid-cum-Application Form
are accepted in the system only after blocking of application money in the relevant bank
account opened with it.
2.
The Stock Exchanges will offer a screen-based facility for registering Bids for the Issue. This facility
will be available on the terminals of the Syndicate Member, their authorized agents and the SCSBs
during the Bid/Issue Period. The Syndicate and the Designated Branches can also set up facilities for
off-line electronic registration of Bids subject to the condition that they will subsequently download the
off-line data file into the on-line facilities for book building on a regular basis.
3.
On the Bid/Issue Closing Date, the members of the Syndicate and the Designated Branches of the
SCSBs shall upload the Bids until such time as may be permitted by the Stock Exchanges. This
information will be available with the Book Running Lead Manager on a regular basis. In order to
ensure that the data uploaded is accurate, the Syndicate may be permitted one Working Day after the
Bid/Issue Closing Date to amend some of the data fields (currently DP ID, Client ID) entered by them
in the electronic bidding system. Bidders are cautioned that a high inflow of Bids typically experienced
on the last Working Day of the Bidding may lead to some Bids received on the last Working Day not
being uploaded due to lack of sufficient uploading time, and such Bids that could not uploaded will not
be considered for allocation. Bids will only be accepted on Working Days, i.e., Monday to Friday
(excluding any public holiday).
4.
Based on the aggregate demand and price for Bids registered on the electronic facilities of the Stock
Exchanges a graphical representation of consolidated demand and price would be made available at
the bidding centres and at the websites of each of the Stock Exchanges during the Bid/Issue Period
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along with category wise details.
5.
At the time of registering each Bid (other than ASBA Bids) the Syndicate shall enter the following
details of the Bidder in the on- line system:
1.
2.
3.
4.
5.
6.
7.
8.
Name of the Bidder(s): Bidders should ensure that the name given in the Bid-cumApplication Form is exactly the same as the name in which the Depositary Account is
held. In case the Bid-cum-Application Form is submitted in joint names, Bidders should
ensure that the Depository Account is also held in the same joint names and are in the
same sequence in which they appear in the Bid-cum-Application Form;
Investor Category such as Individual, Corporate, NRI, etc.;
Numbers of Equity Shares Bid for;
Bid price and price option;
Bid-cum-Application Form number;
DP ID Number and Client Identification Number of the Demat Account of the Bidder;
PAN; and
Cheque amount and Cheque Number.
With respect to ASBA Bids, at the time of registering each Bid, the Designated Branches of the
SCSBs/members of the Syndicate shall enter the following information pertaining to the Bidder into the
electronic bidding system:
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
Name of the Bidder(s);
Application Number;
PAN (of First Bidder if more than one Bidder);
Investor Category and Sub-Category;
Employee/shareholder (if reservation);
Demat ID and client identification number;
Beneficiary Account Number;
Quantity;
Price;
Bank Account Number;
6.
A system generated TRS will be given to the Bidder as a proof of the registration of each of the
bidding options. It is the Bidder’s responsibility to request and obtain the TRS from the
members of the Syndicate or the Designated Branches of the SCSBs. The registration of the Bid
by the Syndicate or the Designated Braches of the SCSBs does not guarantee that the Equity Shares
shall be allocated either by the Syndicate or our Company.
7.
Such TRS will be non-negotiable and by itself will not create any obligation of any kind.
8.
The members of the Syndicate can reject the Bids under the Non-Institutional Portion and Retail
Individual Portion on the technical grounds listed in the Red Herring Prospectus. The SCSB shall
have no right to reject Bids except on technical grounds.
9.
It is to be distinctly understood that the permission given by the Stock Exchanges to use their network
and software of the Online IPO system should not in any way be deemed or construed to mean that
the compliance with various statutory and other requirements by our Company and the Book Running
Lead Manager are cleared or approved by the NSE and the BSE; nor does it in any manner warrant,
certify or endorse the correctness or completeness of any of the compliance with the statutory and
other requirements nor does it take any responsibility for the financial or other soundness of our
Company, our Promoters, our Management or any scheme or project of our Company nor does it in
any manner warrant, certify or endorse the correctness of any of the contents of the Draft Red
Herring Prospectus; nor does it warrant that the Equity Shares will be listed or will continue to be
listed on the Stock Exchanges.
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10.
Only Bids that are uploaded on the online IPO system of the Stock Exchanges shall be considered for
Allocation/Allotment. Members of the Syndicate will be given up to one day after the Bid/Issue Closing
Date to verify DP ID and Client ID uploaded in the online IPO system during the Bid/Issue Period after
which the data will be sent to the Registrar for reconciliation and Allotment of Equity Shares. In case
of discrepancy of data between the BSE or the NSE and the members of the Syndicate or the
Designated Branches, the decision of our Company, in consultation with the Book Running Lead
Manager and the Registrar, based on the physical records of Bid-cum-Application Form shall be final
and binding on all concerned. If the Syndicate Member finds any discrepancy in the DP name, DP ID
and the client ID, the Syndicate will correct the same and the send the data to the Registrar for
reconciliation and Allotment of Equity Shares.
11.
It is to be noted that Syndicate Members shall be responsible for any error in the Bid details uploaded
by them. In case of apparent data entry error by either Syndicate Member or collecting bank in
entering the application number in their respective schedules other things remaining unchanged, the
Bid may be considered as valid and such exceptions may be recorded in minutes of the meeting
submitted to Stock Exchange(s). In the event of mistake in capturing the application number by either
the Syndicate Member or collecting bank leading to rejection of Bid, the Registrar may identify based
on the Bid cum Application form, the entity responsible for the error. Valid records in electronic file will
be those for which money is received.
12.
In case of QIB Bidders, only the (i) SCSBs; and (ii) Book Running Lead Manager and their affiliate
Syndicate Members (only in the Specified Cities) have the right to accept the Bid or reject it.
However, such rejection shall be made at the time of receiving the Bid and only after assigning a
reason for such rejection in writing. In case of Non-Institutional Bidders and Retail Individual Bidders,
bids will be rejected on technical grounds listed herein. The members of the Syndicate may also
reject Bids if all the information required is not provided and the Bid-cum-Application Form is
incomplete in any respect. The SCSBs shall have no right to reject Bids, except on technical grounds.
Build Up of the Book and Revision of Bids
1.
Bids registered by various Bidders through the members of the Syndicate and SCSBs shall be
electronically transmitted to the BSE or NSE mainframe on a regular basis.
2.
The book gets built up at various price levels. This information will be available with the Book Running
Lead Manager on a regular basis at the end of the Bid/Issue Period.
3.
During the Bidding/Issue Period, any Bidder who has registered his or her interest in the Equity
Shares at a particular price level is free to revise his or her Bid within the price band using the printed
Revision Form, which is a part of the Bid-cum-Application Form/ASBA Bid-cum-Application Form.
4.
Revisions can be made in both the desired number of Equity Shares and the Bid Amount by using the
Revision Form. Apart from mentioning the revised options in the Revision Form, the Bidder must also
mention the details of all the options in his or her Bid-cum-Application Form/ASBA Bid-cumApplication Form or earlier Revision Form. For example, if a Bidder has bid for three options in the
Bid-cum-Application Form/ASBA Bid-cum-Application Form and he is changing only one of the
options in the Revision Form, he must still fill the details of the other two options that are not being
changed, in the Revision Form. Incomplete or inaccurate Revision Form will not be accepted by the
members of the Syndicate and the Designated Branches of the SCSBs.
5.
The Bidder can make this revision any number of times during the Bidding Period. However, for any
revision(s) of the Bid, the Bidders will have to use the services of the same members of the Syndicate
or the SCSB through whom the Bidder had placed the original Bid. Bidders are advised to retain
copies of the blank Revision Form and the revised Bid must be made only in such Revision Form or
copies thereof. The QIBs cannot withdraw their Bids after the QIB Bid/Issue Closing Date.
6.
In case of an upward revision in the Price Band announced as above, Retail Individual Bidders who
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had Bid at Cut-off Price could either (i) revise their Bid or (ii) shall make additional payment based on
the cap of the revised Price Band (such that the total amount i.e., original Bid Amount plus additional
payment does not exceed ` 2,00,000 if the Bidder wants to continue to Bid at Cut-off Price), with the
members of the Syndicate to whom the original Bid was submitted. In case the total amount (i.e.,
original Bid Amount plus additional payment) exceeds ` 2,00,000, the Bid will be considered for
allocation under the Non- Institutional Portion in terms of the Draft Red Herring Prospectus. If,
however, the Bidder does not either revise the Bid or make additional payment and the Issue Price is
higher than the cap of the Price Band prior to revision, the number of Equity Shares Bid for shall be
adjusted downwards for the purpose of allocation, such that no additional payment would be required
from the Bidder and the Bidder is deemed to have approved such revised Bid at Cut-off Price.
7.
In case of a downward revision in the Price Band, announced as above and Retail Individual Bidders
who have bid at Cut-off Price could either revise their Bid or the excess amount paid at the time of
bidding would be refunded from the Escrow Account.
8.
Our Company in consultation with the Book Running Lead Manager shall decide the minimum
number of Equity Shares for each Bid to ensure that the minimum application value is within the
range of ` [] to ` [].
9.
Any revision of the Bid shall be accompanied by payment in the form of cheque or demand draft for
the incremental amount, if any, to be paid on account of the upward revision of the Bid. Retail
Individual Bidders Bidding in such categories should note that the revised amount should not exceed
` 2,00,000. The excess amount, if any, resulting from downward revision of the Bid would be returned
to the Bidder at the time of refund in accordance with the terms of the Red Herring Prospectus. With
respect to ASBA Bids, if revision of the Bids results in an incremental amount, the relevant SCSB
shall block the additional Bid amount. In case of Bids other than ASBA Bids, the members of the
Syndicate shall collect the payment in the form of cheque or demand draft if any, to be paid on
account of the upward revision of the Bid at the time of one or more revisions. In such cases the
members of the Syndicate will revise the earlier Bid details with the revised Bid and provide the
cheque or demand draft number of the new payment instrument in the electronic book. The Registrar
will reconcile the Bid data and consider the revised Bid data for preparing the basis of Allotment.
10.
When a Bidder revises his or her Bid, he or she shall surrender the earlier TRS and get a revised
TRS from the Syndicate Member. It is the responsibility of the Bidder to request for and obtain the
revised TRS, which will act as proof of his or her having revised the previous Bid.
11.
In case of discrepancy of data between BSE or NSE and the Syndicate Member, the decision of the
Book Running Lead Manager based on physical records of Bid-cum-Application Form shall be final
and binding to all concerned.
Price Discovery and Allocation
After the Bid/Issue Closing Date, the Book Running Lead Manager will analyze the demand generated at
various price levels and discuss pricing strategy with our Company. The Registrar to the Issue shall
aggregate the demand generated under the ASBA and provide the same to the Book Running Lead
Manager. Our Company, in consultation with the Book Running Lead Manager, shall finalise the Issue
Price, the number of Equity Shares to be allotted and the allocation to successful Bidders.
1. Upto 50% of the Issue (including 5% specifically reserved for Mutual Funds) would be available for
allocation on a proportionate basis after consultation with Designated Stock Exchange, subject to
valid Bids being received at or above the Issue Price.
2. Not less than 15% and 35% of the Issue, would be available for allocation on a proportionate basis to
Non- Institutional Bidders and Retail Individual Bidders, respectively, in consultation with Designated
Stock Exchange, subject to valid Bids being received at or above the Issue Price.
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3. Under-subscription, if any, in any category would be allowed to be met with spillover from any of the
other categories at the discretion of our Company in consultation with the Book Running Lead
Manager and the Designated Stock Exchange. However, if the aggregate demand by Mutual Funds is
less than 3,25,000 Equity Shares, the balance Equity Shares available for allocation in the Mutual
Fund Portion will first be added to the QIB Portion and be allocated proportionately to the QIB
Bidders. In the event that the aggregate demand in the QIB Portion has not been met, undersubscription, if any, would be allowed to be met with spill-over from any other category or combination
of categories at the discretion of our Company, in consultation with the Book Running Lead Manager
and Designated Stock Exchange.
4. Allocation to eligible NRIs or FIIs or foreign venture capital fund registered with SEBI, multilateral and
bilateral development financial institutions applying on repatriation basis will be subject to the
Applicable Law.
5. Our Company reserves the right to cancel this Issue any time after the Bid/Issue Closing Date but
before Allotment without assigning any reasons whatsoever. If our Company withdraws from the
Issue, it shall issue a public notice that shall include reasons for such withdrawal within two days of
the closure of the Issue. The notice of withdrawal shall be issued in the same newspapers where the
pre-Issue advertisements have appeared and our Company shall also promptly inform the Stock
Exchanges. If our Company withdraws the Issue after the Bid / Issue Closing Date and thereafter
determines that it will proceed with an initial public offering of Equity Shares, it shall file a fresh draft
red herring prospectus with the SEBI.
6. In terms of SEBI ICDR Regulations, QIB Bidders shall not be allowed to withdraw their Bid after the
QIB Bid/Issue Closing Date.
7. If an ASBA Bidder wants to withdraw the ASBA Bid-cum-Application Form during the Bidding Period,
the ASBA Bidder shall submit the withdrawal request to a Syndicate member the SCSB, which shall
perform the necessary actions, including deletion of details of the withdrawn ASBA Bid-cumApplication Form from the electronic bidding system of the Stock Exchanges and unblocking of funds
in the relevant bank account.
8. If an ASBA Bidder wants to withdraw the ASBA Bid-cum-Application Form after the Bid/Issue Closing
Date, the ASBA Bidder shall submit the withdrawal request to the Registrar to the Issue before
finalization of basis of Allotment. The Registrar to the Issue shall delete the withdrawn Bid from the
Bid file. The instruction for and unblocking of funds in the relevant bank account, in such withdrawals,
shall be forwarded by the Registrar to the Issue to the SCSB once the basis of Allotment has been
approved by the Designated Stock Exchange.
9. Allotment status details shall be available on the website of the Registrar to the Issue.
10. The Book Running Lead Manager, in consultation with our Company, shall notify the members of the
Syndicate of the Issue Price and allocations to their respective Bidders.
11. Our Company, in consultation with the Book Running Lead Manager, reserves the right to reject any
Bid procured from QIB Bidders, by any or all members of the Syndicate. Rejection of Bids made by
QIBs, if any, will be made at the time of submission of Bids provided that the reasons for rejecting the
same shall be provided to such Bidder in writing.
12. The Basis of Allotment shall be put up on the website of the Registrar to the Issue.
Signing of Underwriting Agreement and RoC Filing
1. Our Company, the Book Running Lead Manager and the Syndicate Members shall enter into an
Underwriting Agreement on finalization of the Issue Price and allocation(s) to the Bidders.
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2. After signing the Underwriting Agreement, our Company and the Book Running Lead Manager would
update and file the updated Red Herring Prospectus with RoC, in terms of Section 56, 60 and
60B of the Companies Act, which would then be termed the ‘Prospectus’. The Prospectus will
contain details of the Issue Price, Issue Size, underwriting arrangements and will be complete in
all material respects.
Public Announcement upon filing of the Draft Red Herring Prospectus
Pursuant to the filing of the Draft Red Herring Prospectus with SEBI, our Company shall on the next day,
make a Public Announcement in one English and one Hindi national newspaper and in one Gujarati
newspaper (regional language newspaper in the state of Gujarat where our Registered Office is located)
with wide circulation. This Public Announcement, subject to the provisions of Section 60 of the
Companies Act, shall invite public to give their comments to SEBI in respect of disclosures made in the
Draft Red Herring Prospectus.
Pre-Issue Advertisement
Subject to Section 66 of the Companies Act, our Company shall, after registering the Red Herring
Prospectus with the RoC, publish a pre-Issue advertisement, in the form prescribed by the SEBI ICDR
Regulations, in one English language national daily newspaper, one Hindi language national daily
newspaper and one Gujarati language daily newspaper, each with wide circulation in which the Public
Announcement upon filing of the Draft Red Herring Prospectus have been published.
Advertisement regarding Issue Price and Prospectus
A statutory advertisement will be issued by our Company after the filing of the Prospectus with the RoC.
This advertisement, in addition to the information that has to be set out in the statutory advertisement,
shall indicate the Issue Price along with a table showing the number of Equity Shares and the amount
payable by an investor. Any material updates between the Red Herring Prospectus and the Prospectus
will be included in such statutory advertisement.
Issuance of Allotment Advice
1.
Upon approval of basis of Allotment by the Designated Stock Exchange and on Allotment by the
Board of Directors or any committee constituted thereof, the Registrar to the Issue shall send to the
members of the Syndicate and SCSBs a list of their Bidders who have been allocated Equity Shares
in the Issue.
2.
The approval of the basis of allocation by the Designated Stock Exchange for QIB Bidders may be
done simultaneously with or prior to the approval of the basis of allocation for the Retail and NonInstitutional Bidders. However, Bidders should note that our Company shall ensure that the date of
Allotment of the Equity Shares to all Bidders in this Issue shall be done on the same date.
3.
The Registrar to the Issue will then dispatch the Allotment Advise to the Bidders who have been
Allotted Equity Shares in the Issue. The dispatch of the Allotment Advise shall be deemed a valid,
binding and irrevocable contract for the Bidders who have been Allotted Equity Shares in the Issue.
4.
Bidders who have been Allotted Equity Shares shall receive the allotment advice from the Registrar to
the Issue.
232
Unblocking of ASBA Account
Once the basis of Allotment is approved by the Designated Stock Exchange, the Registrar to the Issue
shall provide the following details to the Controlling Branches of each SCSB, along with instructions to
unblock the relevant bank accounts and transfer the requisite money to the Public Issue Account
designated for this purpose within the timelines specified in the ASBA facility: (i) the number of Equity
Shares to be Allotted against each valid ASBA Bid, (ii) the amount to be transferred from the relevant
bank account to the Public Issue Account, for each valid ASBA Bid, (iii) the date by which funds referred
to in (ii) above shall be transferred to the Public Issue Account, and (iv) details of rejected ASBA Bids, if
any, along with reasons for rejection and details of withdrawn and/or unsuccessful ASBA Bids, if any, to
enable SCSBs to unblock the respective bank accounts. On the basis of instructions from the Registrar to
the Issue, the SCSBs shall transfer the requisite amount against each successful ASBA Bidder to the
Public Issue Account and shall unblock the excess amount, if any, in the ASBA Account. However, the
Bid Amount may be unblocked in the ASBA Account prior to receipt of notification from the Registrar to
the Issue by the Controlling Branch of the SCSB in relation to the approval of the basis of Allotment in the
Issue by the Designated Stock Exchange in the event of withdrawal or failure of the Issue or rejection of
the ASBA Bid, as the case may be.
Issuance of Allotment Advise to ASBA Bidders
Upon approval of the basis of Allotment by the Designated Stock Exchange, the Registrar to the Issue
shall send the Controlling Branches, a list of the ASBA Bidders who have been allocated Equity Shares in
the Issue, along with:
1. The number of Equity Shares to be allotted against each successful ASBA;
2. The amount to be transferred from the ASBA Account to the Public Issue Account, for each
successful ASBA;
3. The date by which the funds referred to in sub-para (ii) above, shall be transferred to the Public Issue
Account; and
4. The details of rejected ASBAs, if any, along with reasons for rejection and details of
withdrawn/unsuccessful ASBAs, if any, to enable SCSBs to unblock the respective ASBA Accounts.
5. Investors should note that our Company shall ensure that the instructions by our Company for demat
credit of the Equity Shares to all investors in this Issue shall be given on the same date.
The ASBA Bidders shall directly receive the Allotment Advise from the Registrar. The dispatch of an
Allotment Advise to an ASBA Bidder shall be deemed a valid, binding and irrevocable contract with the
ASBA Bidder.
Designated Date and Allotment of Equity Shares
1.
Our Company will ensure that (i) Allotment of Equity Shares; and (ii) credit to the successful Bidder’s
depositary account will be completed within twelve (12) Working Days of the Bid/Issue Closing Date.
2.
As per SEBI ICDR Regulations, Equity Shares will be issued and Allotment shall be made only in the
dematerialised form to the Allotees.
3.
Allotees will have the option to re-materialise the Equity Shares, if they so desire, as per the
provisions of the Companies Act and in the manner stated in the Depositories Act.
Investors are advised to instruct their Depository Participant to accept the Equity Shares that may
be Allotted to them pursuant to this Issue.
Right to Reject Bids
In case of QIB Bidders, our Company, in consultation with the Book Running Lead Manager may reject
Bids provided that the reasons for rejecting the same shall be provided to such Bidder in writing. In case
233
of Non-Institutional Bidders and Retail Individual Bidders who Bid, our Company has a right to reject Bids
on technical grounds. Consequent refunds shall be made by RTGS/NEFT/NECS/Direct Credit/cheque or
pay order or draft and will be sent to the Bidder’s address at the Bidder’s risk. With respect to ASBA Bids,
the Designated Branches of the SCSBs shall have the right to reject ASBA Bids if at the time of blocking
the Bid Amount in the Bidder’s bank account, the respective Designated Branch ascertains that sufficient
funds are not available in the Bidder’s bank account maintained with the SCSB. Subsequent to the
acceptance of the ASBA Bid by the SCSB, our Company would have a right to reject the ASBA Bids only
on technical grounds.
In case the DP ID, BAN and PAN provided in the Bid cum Application Form and as entered into the
electronic Bidding system of the Stock Exchanges by the members of the Syndicate and the SCSBs, as
the case may be, do not match with the DP ID, BAN and PAN available in the depository database, the
Bid is liable to be rejected.
Grounds for Technical Rejections
Bidders are advised to note that Bids are liable to be rejected, inter alia, on the following technical
grounds:
a. Amount paid does not tally with the amount payable for the highest value of Equity Shares Bid for.
With respect to Bids by ASBA Bidders, the amounts mentioned in the ASBA Bid-cum-Application
Form does not tally with the amount payable for the value of the Equity Shares Bid for;
b. In case of partnership firms, Equity Shares may be registered in the names of the individual partners
and no firm as such shall be entitled to apply;
c.
Bid by persons not competent to contract under the Indian Contract Act, 1872, as amended;
d. Application on plain paper;
e. PAN not mentioned in the Bid-cum-Application Form;
f.
GIR number furnished instead of PAN;
g. Bids for lower number of Equity Shares than specified for that category of investors;
h. Bids at a price less than the Floor Price;
i.
Bids at a price more than the Cap Price;
j.
Signature of sole and/or joint Bidders missing;
k.
Submission of more than five ASBA Bid-cum-Application Forms per bank account;
l.
Bids at Cut-off Price by Non-Institutional and QIB Bidders;
m. Bids for number of Equity Shares which are not in multiples of [];
n. Category not indicated;
o. Multiple Bids as defined in the Draft Red Herring Prospectus;
p. In case of Bids under power of attorney or by limited companies, corporate, trust etc., relevant
documents are not submitted;
q. Bids accompanied by Stock invest/money order/postal order/cash;
234
r.
Bid-cum-Application Forms does not have the stamp of the Book Running Lead Manager or
Syndicate Member or the SCSB;
s.
Bid-cum-Application Forms does not have the Bidder‘s depository account details;
t.
Bid-cum-Application Forms are not delivered by the Bidders within the time prescribed as per the Bidcum- Application Forms, Bid/Issue Opening Date advertisement and the Draft Red Herring
Prospectus and as per the instructions in the Draft Red Herring Prospectus and the Bid cum
Application Forms;
u. In case no corresponding record is available with the Depositories that matches the Depository
Participant‘s identity (DP ID) and the beneficiary‘s account number;
v.
With respect to Bids by ASBA Bidders, if there are inadequate funds in the bank account to block the
Bid Amount specified in the ASBA Bid-cum-Application Form at the time of blocking such Bid Amount
in the bank account;
w. Bids for amounts greater than the maximum permissible amounts prescribed by the regulations;
x.
Bids where clear funds are not available in Escrow Accounts as per final certificate from the Escrow
Collection Bank(s);
y.
Bids by QIBs not submitted through the Book Running Lead Manager or in case of ASBA Bids for
QIBs not intimated to the Book Running Lead Manager;
z.
Bids by any person outside India if not in compliance with applicable foreign and Indian Laws;
aa. Bids not uploaded on the terminals of the Stock Exchanges; and
bb. Bids by persons prohibited from buying, selling or dealing in the shares directly or indirectly by SEBI
or any other regulatory authority.
IN CASE THE DP ID, CLIENT ID AND PAN MENTIONED IN THE BID CUM APPLICATION FORM AND
ENTERED INTO THE ELECTRONIC BIDDING SYSTEM OF THE STOCK EXCHANGES BY THE
SYNDICATE/THE SCSBs DO NOT MATCH WITH THE DP ID, CLIENT ID AND PAN AVAILABLE IN
THE RECORDS WITH THE DEPOSITARIES, THE BID CUM APPLICATION FORM IS LIABLE TO BE
REJECTED.
Basis of Allotment
For Retail Individual Bidders
1. Bids received from the Retail Individual Bidders at or above the Issue Price shall be grouped together
to determine the total demand under this category. The allotment to all the successful Retail
Individual Bidders will be made at the Issue Price.
2. The Issue less allotment to Non-Institutional and QIB Bidders shall be available for allotment to Retail
Individual Bidders who have Bid in the Issue at a price that is equal to or greater than the Issue Price.
3. If the aggregate demand in this category is less than or equal to 45,50,000 Equity Shares at or above
the Issue Price, full Allotment shall be made to the Retail Individual Bidders to the extent of their valid
Bids.
4. If the aggregate demand in this category is greater than 45,50,000 Equity Shares at or above the
Issue Price, the allotment shall be made on a proportionate basis of not less than [] Equity Shares.
235
For the method of proportionate basis of allotment, refer below.
For Non-Institutional Bidders
1. Bids received from Non-Institutional Bidders at or above the Issue Price shall be grouped together to
determine the total demand under this category. The allotment to all successful Non-Institutional
Bidders will be made at the Issue Price.
2. The Issue Size less allotment to QIBs and Retail Portion shall be available for allotment to NonInstitutional Bidders who have Bid in the Issue at a price that is equal to or greater than the Issue
Price.
3. If the aggregate demand in this category is less than or equal to 19,50,000 Equity Shares at or above
the Issue Price, full allotment shall be made to Non-Institutional Bidders to the extent of their demand.
4. In case the aggregate demand in this category is greater than 19,50,000 Equity Shares at or above
the Issue Price, allotment shall be made on a proportionate basis not less than [] Equity Shares. For
the method of proportionate basis of allotment refer below.
For Qualified Institutional Bidders
1. Bids received from the QIB Bidders at or above the Issue Price shall be grouped together to
determine the total demand under this portion. The Allotment to all the QIB Bidders will be made at
the Issue Price.
2. The QIB Portion shall be available for allotment to QIB Bidders who have Bid in the Issue at a price
that is equal to or greater than the Issue Price.
3. Allotment shall be undertaken in the following manner:
1. In the first instance allocation to Mutual Funds for up to 5% of the QIB Portion shall be
determined as follows:
1. In the event that Mutual Fund Bids exceeds 5% of the QIB Portion, allocation to Mutual Funds shall
be done on a proportionate basis for up to 5% of the QIB Portion.
2. In the event that the aggregate demand from Mutual Funds is less than 5% of the QIB Portion then all
Mutual Funds shall get full allotment to the extent of valid Bids received above the Issue Price.
3. Equity Shares remaining unsubscribed, if any, not allocated to Mutual Funds shall be available for
allotment to all QIB Bidders as set out in (b) below:
4. In the second instance Allotment to all QIBs shall be determined as follows:
1. In the event that the oversubscription in the QIB Portion, all QIB Bidders who have submitted Bids
above the Issue Price shall be allotted Equity Shares on a proportionate basis for up to 95% of the
QIB Portion.
2. Mutual Funds, who have received allocation as per (a) above, for less than the number of Equity
Shares Bid for by them, are eligible to receive Equity Shares on a proportionate basis along with
other QIB Bidders.
3. Under-subscription below 5% of the QIB Portion, if any, from Mutual Funds, would be included for
allocation to the remaining QIB Bidders on a proportionate basis.
The aggregate allotment available for allocation to QIB Bidders shall be 65,00,000 Equity Shares.
236
Method of proportionate basis of allotment in this Issue
In the event of this Issue being over-subscribed, our Company and the Book Running Lead Manager shall
finalise the basis of allotment in consultation with the Designated Stock Exchange. The Executive Director
(or any other senior official nominated by them) of the Designated Stock Exchange along with the Book
Running Lead Manager and the Registrar to the Issue shall be responsible for ensuring that the Basis of
Allotment is finalised in a fair and proper manner.
The allotment shall be made in marketable lots, on a proportionate basis as explained below:
1. Bidders will be categorised according to the number of Equity Shares applied for;
2. The total number of Equity Shares to be allotted to each category as a whole shall be arrived at on a
proportionate basis, which is the total number of Equity Shares applied for in that category (number of
Bidders in the category multiplied by the number of Equity Shares applied for) multiplied by the
inverse of the over-subscription ratio;
3. Number of Equity Shares to be Allotted to the successful Bidders will be arrived at on a proportionate
basis, which is total number of Equity Shares applied for by each Bidder in that category multiplied by
the inverse of the over-subscription ratio.
4. In all Bids where the proportionate Allotment is less than [] Equity Shares per Bidder, the allotment
shall be made as follows:
1. Each successful Bidder shall be allotted a minimum of [] Equity Shares; and
2. The successful Bidders out of the total Bidders for a category shall be determined by draw of lots in a
manner such that the total number of Equity Shares allotted in that category is equal to the number of
Equity Shares calculated in accordance with (b) above.
If the proportionate allotment to a Bidder is a number that is more than [] but is not a multiple of one
(which is the marketable lot), the number in excess of the multiple of one would be rounded off to the
higher multiple of one if that number is 0.5 or higher. If that number is lower than 0.5, it would be rounded
off to the lower multiple of one. All Bidders in such categories would be Allotted Equity Shares arrived at
after such rounding off.
If the Equity Shares allocated on a proportionate basis to any category are more than the Equity Shares
allotted to the Bidders in that category, the remaining Equity Shares available for allotment shall be first
adjusted against any other category, where the allotted shares are not sufficient for proportionate
allotment to the successful Bidders in that category. The balance Equity Shares, if any, remaining after
such adjustment will be added to the category comprising Bidders applying for minimum number of Equity
Shares.
Illustration of Allotment to QIBs and Mutual Funds (“MF”)
1.
Sr.
No.
1.
2.
3.
Issue Details
Particulars
Issue details
Issue size
Allocation to QIB (50%)
Of which:
a. Allocation to MF (5%)
b. Balance for all QIBs including MFs
No. of QIB applicants
20,000 Lacs Equity Shares
10,000 Lacs Equity Shares
500 Lacs Equity Shares
9,500 Lacs Equity Shares
10
237
Sr.
No.
4.
Particulars
Issue details
No. of shares applied for
50,000 Lacs Equity Shares
2.
Details of QIB Bids
Sr. No.
1
2
3
4
5
6
7
8
9
10
Type of QIB Bidders
No. of Equity Shares bid for (` in Lacs)
A1
5,000
A2
2,000
A3
13,000
A4
5,000
A5
5,000
MF1
4,000
MF2
4,000
MF3
8,000
MF4
2,000
MF5
2,000
Total
50,000
# A1-A5: (QIB Bidders other than MFs), MF1-MF5 (QIB Bidders which are Mutual Funds)
3.
Details of Allotment to QIB Bidders/Applicants
Type of
QIB
Bidders
Equity
Shares
bid for
(I)
(II)
Allocation of 350 Lacs
Equity Shares to MF
proportionately (please
see note 2 below)
(III)
A1
A2
A3
A4
A5
MF1
MF2
MF3
MF4
MF5
500
200
1,300
500
500
400
400
800
200
200
5,000
0
0
0
0
0
70
70
140
35
35
350
(Number of Equity Shares in Lacs)
Allocation of balance 6,650
Aggregate
Lacs Equity Shares to QIBs
allocation to
proportionately (please see
MFs
note 4 below)
(IV)
(V)
665
266
1,729
665
665
532
532
1,064
266
266
6,650
0
0
0
0
0
602
602
1,204
301
301
3,010
Please note:
1.
2.
3.
4.
The illustration presumes compliance with the requirements specified in the Draft Red Herring
Prospectus in the Chapter titled “Issue Structure” beginning on page number 177 of the Draft Red
Herring Prospectus.
Out of 10,000 Lacs shares allocated to QIBs, 350 Lacs (i.e. 5%) will be allocated on proportionate
basis among 5 Mutual Fund applicants who applied for 2,000 Lacs shares in QIB category.
The balance 9,500 Lacs shares (i.e. 10,000 - 500 (available for MFs)) will be allocated on
proportionate basis among 10 QIB applicants who applied for 5,000 Lacs shares (including 5 MF
applicants who applied for 2,000 Lacs shares).
The figures in the fourth column titled “Allocation of balance 9,500 Lacs shares to QIBs
proportionately” in the above illustration are arrived as under:
238
1. For QIBs other than Mutual Funds (A1 to A5)= No. of shares bid for (i.e. in column II) X 665 / 4,965;
2. For Mutual Funds (MF1 to MF5)= [(No. of shares bid for (i.e. in column II of the table above) less
Equity Shares allotted ( i.e., column III of the table above)] X 79.80/495.80; and
3. The numerator and denominator for arriving at allocation of 9,500 Lacs shares to the 10 QIBs are
reduced by 500 Lacs shares, which have already been allotted to Mutual Funds in the manner
specified in column III of the table above.
Letters of Allotment/Allotment Advise or refund orders to Bidders or instructions to the SCSBs
Our Company shall give credit to the beneficiary account with Depository Participants within two (2)
Working Days from the date of allotment to all successful Bidders, including ASBA Bidders, which in any
event shall be completed prior to twelve (12) Working Days from the Bid/Issue Closing Date. Applicants
residing at the centres where clearing houses are managed by the RBI, will get refunds through NECS
except where applicant is otherwise disclosed as eligible to get refunds through Direct Credit, NEFT or
RTGS. Our Company shall ensure that refund instructions are given to the Refund Banker or the SCSBs,
as applicable, within 12 Working Days of the Bid Closing Date. Our Company agrees that it shall pay
interest at the rate of 15% per annum if the refund orders have not been dispatched to the Bidders or if, in
a case where the refund or portion thereof is made in electronic manner, the refund instructions have not
been given to the clearing system in the disclosed manner within 12 Working Days from the Bid Closing
date. In case of ASBA Bidders, the Registrar to the Issue shall instruct the relevant SCSB to unblock the
funds in the relevant ASBA Account to the extent of the Bid Amount specified in the ASBA Bid cum
Application Form for withdrawn, rejected or unsuccessful or partially successful ASBA Bids prior to twelve
(12) Working Days from the Bid/Issue Closing Date.
In accordance with the requirements of the Stock Exchanges and SEBI ICDR Regulations, our Company
undertakes that:
1. Allotment shall be made only in dematerialised form prior to twelve (12) Working Days from the
Bid/Issue Closing Date;
2. Dispatch of refund orders, except for Bidders who can receive refunds through Direct Credit, NEFT,
RTGS or NECS, shall be done prior to twelve (12) Working Days from the Bid/Issue Closing Date;
3. Instructions to SCSBs to unblock the funds in the relevant ASBA Account for withdrawn rejected or
unsuccessful Bids shall be made prior to twelve (12) Working Days from the Bid/Issue Closing Date;
and
4. Our Company shall ensure that refund instructions are given to the Refund Banker or the SCSBs, as
applicable, within 12 Working Days of the Bid Closing Date. Our Company agrees that it shall pay
interest at the rate of 15% per annum if the refund orders have not been dispatched to the Bidders or
if, in a case where the refund or portion thereof is made in electronic manner, the refund instructions
have not been given to the clearing system in the disclosed manner within 12 Working Days from the
Bid Closing date.
Our Company will provide adequate funds required for despatch of refund orders or Allotment advice to
the Registrar to the Issue. Refunds will be made by cheques, pay orders or demand drafts drawn on
the Escrow Collection Bank(s) and payable at par at places where Bids are received. The bank
charges, if any, for encashing such cheques, pay orders or demand drafts at other centres will be
payable by the Bidders.
Bidder’s PAN, Bidder’s Depository Account and Bank Account Details
Bidders should note that on the basis of the Sole/First Bidder’s Permanent Account Number, Depository
Participant’s name, DP ID number and beneficiary account number provided by them in the Bid cum
239
Application Form and as entered into the electronic bidding system of the Stock Exchanges by the
members of the Syndicate and the SCSBs as the case may be, the Registrar to the Issue will obtain from
the Depository the demographic details including the Bidder’s address, occupation, category, age and
bank account details including the nine-digit Magnetic Ink Character Recognition (“MICR”) code as
appearing on a cheque leaf (‘Demographic Details’). These Demographic Details would be used for giving
refunds and allotment advice (including through physical refund warrants, direct credit, NECS, NEFT and
RTGS) to the Bidders. It is mandatory to provide the bank account details in the space provided in the
Bid-cum-Application Form/ASBA Bid-cum-Application Form and Bid-cum-Application Forms/ASBA Bidcum-Application Forms that do not contain such details are liable to be rejected. Hence, Bidders are
advised to immediately update their bank account details, PAN and Demographic Details as appearing on
the records of the Depository Participant and ensure that they are true and correct. Failure to do so could
result in delays in dispatch/credit of refunds to Bidders at the Bidders sole risk and neither the Book
Running Lead Manager nor the Registrar to the Issue or the Escrow Collection Banks or the SCSBs nor
our Company shall have any responsibility and undertake any liability for the same. Hence, Bidders
should carefully fill in their depository account details in the Bid-cum-Application Form. Please note that in
case the DP ID, Client ID and PAN mentioned in the Bid-cum-Application Form/ASBA Bid-cumApplication Form and entered into the electronic Bidding system of the Stock Exchanges by the members
of the Syndicate, do not match with the DP ID, Client ID and PAN available in the depositories’ database,
such Bid-cum-Application Form/ASBA Bid-cum-Application Form is liable to be rejected.
IT IS MANDATORY FOR ALL THE BIDDERS TO GET THEIR EQUITY SHARES IN DEMATERIALISED
FORM. ALL BIDDERS SHOULD MENTION THEIR PAN, DEPOSITORY PARTICIPANT’S NAME,
DEPOSITORY PARTICIPANT IDENTIFICATION NUMBER AND BENEFICIARY ACCOUNT NUMBER
IN THE BID-CUM-APPLICATION FORM/ASBA- BID-CUM-APPLICATION FORM. INVESTORS MUST
ENSURE THAT THE NAME GIVEN IN THE BID-CUM-APPLICATION FORM/ASBA BID-CUMAPPLICATION FORM AS THE CASE MAY BE IS EXACTLY THE SAME AS THE NAME IN WHICH
THE DEPOSITORY ACCOUNT IS HELD. IN CASE THE BID-CUM-APPLICATION FORM/ASBA BIDCUM-APPLICATION FORM IS SUBMITTED IN JOINT NAMES, IT SHOULD BE ENSURED THAT THE
DEPOSITORY ACCOUNT IS ALSO HELD IN THE SAME JOINT NAMES AND ARE IN THE SAME
SEQUENCE IN WHICH THEY APPEAR IN THE BID-CUM-APPLICATION FORM/ ASBA BID-CUMAPPLICATION FORM.
These Demographic Details would be used for all correspondence with the Bidders including mailing of
the Allocation Advice and making refunds as per the modes disclosed and the Demographic Details given
by Bidders in the Bid-cum-Application Form would not be used for these purposes by the Registrar.
Hence, Bidders are advised to update their Demographic Details as provided to their Depository
Participants and ensure that they are true and correct. By signing the Bid-cum-Application Form, Bidder
would have deemed to authorize the depositories to provide, upon request, to the Registrar to the Issue,
the required Demographic Details as available on its records.
In case of Bidders receiving refunds through electronic transfer of funds, delivery of refund
orders/ Allocation Advice may get delayed if the same once sent to the address obtained from the
depositories are returned undelivered. In such an event, the address and other details given by
the Bidder in the Bid-cum-Application Form/ASBA Bid-cum-Application Form would be used only
to ensure dispatch of refund orders. Please note that any such delay shall be at the Bidders sole
risk and neither our Company, the Registrar, Escrow Collection Bank(s) nor the Book Running
Lead Manager shall be liable to compensate the Bidder for any losses caused to the Bidder due to
any such delay or liable to pay any interest for such delay.
In case no corresponding record is available with the Depositories that matches three parameters,
namely, PAN of the sole/first Bidders, the Depository Participant’s identity (DP ID) and the
beneficiary’s identity, then such Bids are liable to be rejected.
Refunds, dividends and other distributions, if any, will be payable in Indian Rupees only and net
of bank charges and/or commission. In case of Bidders who remit money through Indian Rupee
drafts purchased abroad, such payments in Indian Rupees will be converted into US Dollars or
240
any other freely convertible currency as may be permitted by the RBI at the rate of exchange
prevailing at the time of remittance and will be dispatched by registered post or if the Bidders so
desire, will be credited to their NRE accounts, details of which should be furnished in the space
provided for this purpose in the Bid-cum-Application Form. Our Company will not be responsible
for loss, if any, incurred by the Bidder on account of conversion of foreign currency.
There is no reservation for eligible NRIs and FIIs and all Bidders will be treated on the same basis
with other categories for the purpose of allocation.
Equity Shares in Dematerialized Form with NSDL or CDSL
As per the provisions of Section 68B of the Companies Act, the Equity Shares in this Issue shall be
allotted only in a dematerialized form, (i.e. not in the form of physical certificates but be fungible and be
represented by the statement issued through the electronic mode). In this context, two agreements have
been signed among us, the respective Depositories and the Registrar to the Issue:
1. a tripartite agreement dated [] with NSDL, our Company and Registrar to the Issue;
2. a tripartite agreement dated [] with CDSL, our Company and Registrar to the Issue.
3.
All Bidders can seek Allotment only in dematerialized mode. Bids from any investor without
relevant details of his or her depository account are liable to be rejected.
4.
Bidder applying for Equity Shares must have at least one beneficiary account with either of the
Depository Participants of either NSDL or CDSL prior to making the Bid.
5.
The Bidder must necessarily fill in the details (including the Beneficiary Account Number and
Depository Participant’s Identification number) appearing in the Bid-cum-Application Form/ASBA
Bid-cum-Application Form or Revision Form.
6.
Equity Shares allotted to a successful Bidder will be credited in electronic form directly to the
beneficiary account (with the Depository Participant) of the Bidder.
7.
Names in the Bid-cum-Application Form/ASBA Bid-cum-Application Form or Revision Form
should be identical to those appearing in the account details in the Depository. In case of joint
holders, the names should necessarily be in the same sequence as they appear in the account
details in the Depository.
8.
Non-transferable allotment advice will be directly sent to the Bidder by the Registrar to this Issue.
Refunds will be made directly by the Registrar to the Issue as per the modes disclosed.
9.
If incomplete or incorrect details are given under the heading ‘Request for Equity Shares in
electronic form’ in the Bid-cum-Application Form, ASBA Bid-cum-Application Form or Revision
Form, it is liable to be rejected.
10. The Bidder is responsible for the correctness of his or her demographic details given in the Bidcum-Application Form or ASBA Bid-cum-Application Form vis-à-vis those with his or her
Depository Participant.
11. It may be noted that Equity Shares in electronic form can be traded only on the stock exchanges
having electronic connectivity with NSDL and CDSL. All the Stock Exchanges where the Equity
Shares of our Company are proposed to be listed have electronic connectivity with CDSL and
NSDL.
12. The trading of the Equity Shares of our Company on the Stock Exchanges would be in
dematerialized form only for all investors.
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Communications
All future communications in connection with Bids made in this Issue should be addressed to the
Registrar to the Issue quoting the full name of the sole or First Bidder, Bid-cum-Application Form number,
number of Equity Shares applied for, date, bank and branch where the Bid was submitted and cheque,
number and issuing bank thereof or with respect to ASBA Bids, ASBA Account number in which the
amount equivalent to the Bid Amount was blocked.
Investors can contact the Compliance Officer or the Registrar to the Issue in case of any pre-Issue
or post-Issue related problems such as non-receipt of letters of allotment, credit of allotted Equity
Shares in the respective beneficiary accounts, refund orders etc. For details regarding the
Compliance Officer or the Registrar to the Issue please refer to the Chapter titled ‘General
Information’ beginning on page number Error! Bookmark not defined. of the Draft Red Herring
Prospectus.
In case of ASBA Bids submitted to the Designated Branches of the SCSBs, the Bidders can
contact the Designated Branches.
Impersonation
Attention of the applicants is specifically drawn to the provisions of Sub-Section (1) of Section 68
A of the Companies Act, which is reproduced below:
“Any person who:
1. makes in a fictitious name, an application to a company for acquiring or subscribing for, any
shares therein; or
2. otherwise induces a company to allot, or register any transfer of shares therein to him, or any
other person in a fictitious name,
shall be punishable with imprisonment for a term which may extend to five years”.
PAYMENT OF REFUND
Bidders other than ASBA Bidders must note that on the basis of the names of the Bidders, Depository
Participant’s name, DP ID, Beneficiary Account number provided by them in the Bid-cum-Application
Form/ASBA Bid-cum-Application Form, the Registrar to the Issue will obtain, from the Depositories, the
Bidders’ bank account details, including the nine digit Magnetic Ink Character Recognition (“MICR”) code
as appearing on a cheque leaf. Hence Bidders are advised to immediately update their bank account
details as appearing on the records of the Depository Participant. Please note that failure to do so could
result in delays in dispatch of refund order or refunds through electronic transfer of funds, as applicable,
and any such delay shall be at the Bidders’ sole risk and neither our Company, the Registrar to the Issue,
Escrow Collection Bank(s), Bankers to the Issue nor the Book Running Lead Manager shall be liable to
compensate the Bidders for any losses caused to the Bidder due to any such delay or liable to pay any
interest for such delay.
In the case of Bids from eligible NRIs and FIIs, refunds, dividends and other distributions, if any, will be
payable in Indian Rupees only and net of bank charges and/or commission. In case of Bidders who remit
money through Indian Rupee drafts purchased abroad, such payments in Indian Rupees will be
converted into US Dollars or any other freely convertible currency as may be permitted by the RBI at the
rate of exchange prevailing at the time of remittance and will be dispatched by registered post or if the
Bidders so desire, will be credited to their NRE accounts, details of which should be furnished in the
space provided for this purpose in the Bid-cum-Application Form. Our Company will not be responsible for
loss, if any, incurred by the Bidder on account of conversion of foreign currency.
242
Mode of making refunds
Mode of making refunds for Bidders other than ASBA Bidders
The payment of refund, if any, for Bidders other than ASBA Bidders would be done through various
modes in the following order of preference:
1.
NECS – Payment of refund would be done through NECS for Bidders having an account at any of the
centres specified by the RBI. This mode of payment of refunds would be subject to availability of
complete bank account details including the MICR code as appearing on a cheque leaf, from the
Depositories. The payment of refunds is mandatory for applicants having a bank account at any of the
centres where such facility is made available, except where the applicant, being eligible, opts to
receive refund through direct credit or RTGS.
2.
Direct Credit – Applicants having bank accounts with the Refund Bank(s), as mentioned in the Bidcum-Application Form, shall be eligible to receive refunds through direct credit. Charges, if any, levied
by the Refund Bank(s) for the same would be borne by our Company.
3.
RTGS – Applicants having a bank account at any of the centres where such facility is available and
whose refund amount exceeds ` 2 Lacs has the option to receive refund through RTGS. Such eligible
applicants who indicate their preference to receive refund through RTGS are required to provide the
IFSC code in the Bid-cum-Application Form. In the event the same is not provided, refund shall be
made through NECS. Charges, if any, levied by the Refund Bank(s) for the same would be borne by
our Company. Charges, if any, levied by the applicant’s bank receiving the credit would be borne by
the applicant.
4.
NEFT – Payment of refund shall be undertaken through NEFT wherever the applicants’ bank has
been assigned the Indian Financial System Code (IFSC), which can be linked to a Magnetic Ink
Character Recognition (MICR), if any, available to that particular bank branch. IFSC Code will be
obtained from the website of RBI as on a date immediately prior to the date of payment of refund,
duly mapped with MICR numbers. Wherever the applicants have registered their nine digit MICR
number and their bank account number while opening and operating the demat account, the same
will be duly mapped with the IFSC Code of that particular bank branch and the payment of refund will
be made to the applicants through this method. The process flow in respect of refunds by way of
NEFT is at an evolving stage and hence use of NEFT is subject to operational feasibility, cost and
process efficiency. In the event that NEFT is not operationally feasible, the payment of refunds would
be made through any one of the other modes as discussed in the sections.
For all other applicants, including those who have not updated their bank particulars with the MICR code,
the refund orders will be dispatched through Speed Post/ Registered Post. Such refunds will be made by
cheques, pay orders or demand drafts drawn on the Escrow Collection Banks and payable at par at
places where Bids are received. Bank charges, if any, for cashing such cheques, pay orders or demand
drafts at other centres will be payable by the Bidders.
Mode of making refunds for ASBA Bidders
In case of ASBA Bidders, the Registrar to the Issue shall instruct the relevant SCSB to unblock the funds
in the relevant ASBA Account to the extent of the Bid Amount specified in the ASBA Bid-cum-Application
Forms for withdrawn, rejected or unsuccessful or partially successful ASBA Bids prior to twelve (12)
Working Days of the Bid/Issue Closing Date.
Interest on refund of excess Bid Amount
Our Company shall pay interest at 15% p.a. for any delay beyond 15 days from the Bid/Issue Closing
Date, whichever is later, if Allotment is not made and refund orders are not dispatched or if, in a case
243
where the refund or portion thereof is made in electronic manner, the refund instructions have not been
given to the clearing system in the disclosed manner and/or demat credits are not made to investors
within the 12 Working Days prescribed above. If such money is not repaid within eight days from the day
our Company becomes liable to repay, our Company and every Director of our Company who is an officer
in default shall, on and from expiry of eight days, be jointly and severally liable to repay the money with
interest as prescribed under the applicable law..
Disposal of Applications and Application Moneys and Interest in case of delay
With respect to Bidders other than ASBA Bidders, our Company shall ensure dispatch of Allotment
Advice, refund orders (except for Bidders who receive refunds through electronic transfer of funds) and
give credit of Equity Share allotted to the beneficiary account with Depository Participants and submit the
documents pertaining to the Allotment to the Stock Exchanges within two (2) Working Days from the date
of allotment to all successful Bidders, including ASBA Bidders, which in any event shall be undertaken
prior to twelve (12) Working Days of the Bid/Issue Closing Date.
In case of applicants who receive refunds through NECS, direct credit, NEFT or RTGS, the refund
instructions will be given to the clearing system prior to twelve (12) Working Days from the Bid/Issue
Closing Date. In case of other applicants, our Company shall ensure dispatch of refund orders if any, by
registered post or speed post at the sole or First Bidder’s sole risk prior to twelve (12) Working Days from
the Bid/Issue Closing Date. Applicants to whom refunds are made through electronic transfer of funds will
be sent a letter through ordinary post intimating them about the mode of credit of refund prior to twelve
(12) Working Days of Bid/Issue Closing date. Our Company shall ensure dispatch of refund orders, if any,
by registered post or speed post or Direct Credit, NEFT, RTGS or NECS, as applicable, only at the sole
or First Bidder's sole risk prior to Twelve (12) Working Days of the Bid/Issue Closing Date, and adequate
funds for making refunds to unsuccessful applicants as per the mode(s) disclosed shall be made
available to the Registrar to the Issue by the Issuer. Our Company shall ensure dispatch of allotment
advice, refund orders and give benefit to the beneficiary account with Depository Participants and submit
the documents pertaining to the allotment to the Stock Exchanges within two (2) Working Days of date of
Allotment.
Letters of Allotment or Refund Orders or instructions to the SCSBs
In case of ASBA Bidders, the Registrar to the Issue shall instruct the relevant SCSB to unblock the funds
in the relevant ASBA Account to the extent of the Bid Amount specified in the ASBA Bid-cum-Application
Forms for withdrawn, rejected or unsuccessful or partially successful ASBA Bids prior to twelve (12)
Working Days from the Bid/Issue Closing Date, which shall be completed within one Working Day after
the receipt of such instruction from the Registrar to the Issue.
Interest in case of delay in dispatch of Allotment Letters or Refund Orders/instruction to SCSB by
the Registrar
In accordance with the Companies Act, the requirements of the Stock Exchanges and the SEBI ICDR
Regulations our Company further undertakes that:
1. Allotment shall be made only in dematerialised form prior to twelve (12) Working Days from the
Bid/Issue Closing Date;
2. Dispatch of refund orders, except for Bidders who can receive refunds through Direct Credit,
NEFT, RTGS or NECS, shall be done prior to twelve (12) Working Days from the Bid/Issue
Closing Date;
3. Instructions to SCSBs to unblock the funds in the relevant ASBA Account for withdrawn rejected
or unsuccessful Bids shall be made prior to twelve (12) Working Days from the Bid/Issue Closing
Date; and
4. Our Company shall, in accordance with Regulation 18 of the SEBI ICDR Regulations, pay interest
at 15% p.a. if the allotment letters/ refund orders have not been dispatched to the applicants or if,
in a case where the refund or portion thereof is made in electronic manner through Direct Credit,
244
NEFT, RTGS or NECS, the refund instructions have not been given to the clearing system in the
disclosed manner prior to the twelve (12) Working Days from the Bid/Issue Closing Date or eight
(8) days after the day our Company becomes liable to repay, whichever is earlier, provided that
the beneficiary particulars relating to such Bidders as given by the Bidders is valid at the time of
the upload of the electronic transfer or if instructions to SCSBs to unblock funds in the ASBA
Accounts are not given prior to the twelve (12) Working Days from the Bid/Issue Closing Date or
eight (8) days after the day our Company becomes liable to repay, whichever is earlier.
Refunds will be made by cheques, pay-orders or demand drafts drawn on a bank appointed by us, as an
Escrow Collection Bank and payable at par at places where Bids are received, except for Bidders who
have opted to receive refunds through the Direct Credit, NEFT, RTGS or NECS facility. Bank charges, if
any, for encashing such cheques, pay orders or demand drafts at other centres will be payable by the
Bidders.
Our Company will provide adequate funds required for dispatch of refund orders or allotment advice to
the Registrar to the Issue.
Refunds will be made by cheques, pay-orders or demand drafts drawn on a bank appointed by our
Company as a Refund Bank and payable at par at places where Bids are received. Bank charges, if any,
for encashing such cheques, pay orders or demand drafts at other centres will be payable by the Bidders.
Undertaking by the Company
We undertake as follows:
1. That the complaints received in respect of this Issue shall be attended to expeditiously and
satisfactorily;
2. That all steps will be taken for the completion of the necessary formalities for listing and
commencement of trading at all the stock exchanges where the Equity Shares are proposed to be
listed within seven Working Days of finalization of the Basis of Allotment or twelve (12) Working Days
from the Bid/Issue Closing Date, whichever is earlier;
3. That the funds required for making refunds as per the modes disclosed or dispatch of allotment
advice by registered post or speed post shall be made available to the Registrar to the Issue by us;
4. That where refunds are made through electronic transfer of funds, a suitable communication shall be
sent to the applicant within 12 days of the Bid/Issue Closing Date, as the case may be, giving details
of the bank where refunds shall be credited along with amount and expected date of electronic credit
of refund;
5. That our Promoters’ contribution in full has already been brought in;
6. That the certificates of the securities/ refund orders to the non-resident Indians shall be dispatched
within specified time;
7. That no further issue of Equity Shares shall be made till the Equity Shares offered through the Red
Herring Prospectus are listed or until the Bid monies are refunded on account of non-listing, undersubscription etc.; and
8. That, adequate arrangements shall be made to collect all Applications Supported by Blocked Amount
and to consider them similar to non-ASBA applications while finalizing the Basis of Allotment.
Withdrawal of the Issue
Our Company, in consultation with the Book Running Lead Manager and in accordance with the SEBI
ICDR Regulations, reserves the right not to proceed with this Issue at any time after the Bid/Issue
245
Opening Date but before the Allotment, without assigning any reason thereof. In such an event our
Company shall issue a public notice in the newspapers, in which the pre-Issue advertisements were
published, within two Working Days of the Bid/ Issue Closing Date, providing reasons for not proceeding
with the Issue. The Book Running Lead Manager, through the Registrar to the Issue, shall notify the
SCSBs to unblock the bank accounts of the ASBA Bidders within one Working Day from the day of
receipt of such notification. Our Company shall also inform the same to Stock Exchanges on which the
Equity Shares are proposed to be listed.
Notwithstanding the foregoing, this Issue is also subject to obtaining (i) the final listing and trading
approvals of the Stock Exchanges, which our Company shall apply for only after Allotment and (ii) the
final RoC approval of the Prospectus after it is filed with the RoC.
In the event of withdrawal of this Issue anytime after the Bid/Issue Opening Date, our Company will
forthwith repay, without interest, all monies received from the applicants in pursuance of the Red Herring
Prospectus. If such money is not repaid within 8 days after our Company become liable to repay it, i.e.,
from the date of withdrawal, then our Company, on and from the expiry of eight days, be liable to repay
the money, with interest at the rate of 15% per annum on application money.
In the event that our Company decides not to proceed with this Issue after Bid/Issue Closing Date and
thereafter determines that it will proceed with an initial public offering of its Equity Shares, our Company
shall file a fresh draft red herring prospectus with SEBI.
Utilization of the Issue proceeds
The Board of Directors of our Company certifies that:
1. all monies received out of this Issue shall be transferred to a separate Bank Account other than the
bank account referred to in Sub-Section (3) of Section 73 of the Companies Act;
2. details of all monies utilized out of the Issue referred above shall be disclosed under an appropriate
separate head in the balance sheet of our Company indicating the purpose for which such
monies have been utilized;
3. details of all unutilized monies out of the Issue, if any, shall be disclosed under an appropriate
separate head in the balance sheet of our Company indicating the form in which such unutilized
monies have been invested; and
4. Our Company shall comply with the requirements of Clause 49 of the Listing Agreement in relation to
the disclosure and monitoring of the utilisation of the proceeds of the Issue.
Our Company shall not have recourse to the Issue Proceeds until the approval for listing and trading of
the Equity Shares from all the Stock Exchanges where listing is sought has been received.
The Book Running Lead Manager undertakes that the complaints or comments received in respect of this
Issue shall be attended to by our Company expeditiously and satisfactorily.
246
SECTION IX- MAIN PROVISIONS OF ARTICLES OF ASSOCIATION OF OUR COMPANY
C. Mahendra InfoJweles Limited
Regulation in Table A to apply to the extent they are not inconsistent with Articles.
(a) The Regulations contained in Table ‘A’ of Schedule 1 of the Act shall apply in so far as and to
the extent they are not consistent with any of the provisions in these articles.
(b) Wherever in the said Act it has been provided that the Company shall have any right, privilege
or authority or that Company could carry out any transaction only if the Company is so
authorized its Articles then and in that case this regulation hereby authorizes and empowers
the Company to have such right, privilege, authority and to carry such transaction as have
been permitted by the Act without their being any specific regulation in that behalf herein
provided. As illustration of such rights, authorities and transaction the following are set out with
relevant sections.
The Authorized capital of our Company is ` 40 Crores divided into 4,00,00,000 Equity Shares of ` 10
each.
SHARE CAPITAL AND VARIATION OF RIGHTS
Title of Article
Share Capital and
Variation of rights.
Increase Reduction
and Alteration of
Capital
Article
Number
5
6
Contents
(a)
The Authorised Share Capital of the Company shall be as
per paragraph V of the Memorandum of Association of the
Company with rights to alter the same in whatever way as deemed
fit by the Company. The Company may increase the Authorised
Capital which may consist of Equity and/or Preference Shares as
the Company in General Meeting may determine in accordance
with the law for the time being in force relating to Companies with
power to increase or reduce such capital from time to time in
accordance with the Regulations of the Company and the
legislative provisions for the time being in force in this behalf and
with power to divide the shares in the capital for the time being into
Equity Share Capital or Preference Share Capital and to attach
thereto respectively any preferential, qualified or special rights,
privileges or conditions and to vary, modify and abrogate the same
in such manner as may be determined by or in accordance with
these presents.
(b)
Subject to the rights of the holders of any other shares
entitled by the terms of issue to preferential repayment over the
equity shares in the event of winding up of the Company, the
holders of the equity shares shall be entitled to be repaid the
amounts of capital paid up or credited as paid up on such equity
shares and all surplus assets thereafter shall belong to the holders
of the equity shares in proportion to the amount paid up or credited
as paid up in such equity shares respectively at the
commencement of the winding up.
The Company may from time to time in general meeting increase
its share capital by the issue of new shares of such amounts as it
thinks expedient
247
On what conditions
the new shares may
be issued
7
Further issue of
Shares
8
Subject to the provisions of Sections 80, 81 and 85 to 90 of the Act,
the new shares shall be issued upon such terms and conditions
and with such rights and privileges annexed thereto by the general
meeting creating the same as shall be directed and if no direction
be given as the Directors shall determine and in particular such
shares may be issued subject to the provisions of the said sections
with a preferential or qualified right to dividends and in distribution
of assets of the Company and subject to the provisions of the said
sections with special or without any right of voting and subject to
the provisions of Section 80 of the Act any preference shares may
be issued on the terms that they are or at the option of the
Company are liable to be redeemed.
(a) Where at any time after the expiry of two years from the
formation of the Company or at any time after the expiry of one
year from the allotment of shares in the company made for the first
time after its formation, whichever is earlier, it is proposed to
increase the subscribed capital of the Company by allotment of
further shares, whether out of un-issued share capital or out of the
increased share capital.
(I) such further shares shall be offered to the persons who at the
date of offer, are holders of the equity shares of the Company, in
proportion, as nearly as circumstances admit, to the capital paid up
on those shares at that date
(ii) the offer aforesaid shall be made by a notice specifying the
number of shares offered and limiting a time not being less than
one month from the date of the offer within which the offer, if not
accepted, will be deemed to have been declined.
(iii) the offer aforesaid shall be deemed to include a right
exercisable by the person concerned to renounce the shares
offered to him or any of them in favour of any other person and the
notice shall contain a statement of this right.
Provided That the Directors may decline, without assigning any
reason to allot any shares to any person in whose favour any
member may renounce the shares offered to him.
(iv) after the expiry of the specified in the notice aforesaid or on
receipt of earlier intimation from the person to whom such notice is
given that he declines to accept the shares offered, the Board may
dispose of them in such manner as they think most beneficial to the
Company.
(c) Notwithstanding anything contained in sub-clause (1) thereof,
the further shares aforesaid may be offered to any persons
(whether or not those persons include the persons referred to in
clause (a) of sub-clause (1) hereof in any manner whatsoever.
(i)
If a special resolution to that effect is passed by the
Company in General Meeting, or
(ii)
Where no such special resolution is passed if the votes
cast (whether on a show of hands or on a poll, as the case may be)
in favour of the proposal contained in the resolution moved in that
general meeting (including the casting vote, if any, of the Chairman)
248
Shares under Control
of Directors
9
by members who, being entitled so to do, vote in person, or where
proxies are allowed, by proxy, exceed the votes, if any, cast against
the proposal by members so entitled and voting and the Central
Government is satisfied, on an application made by the Board of
Directors in this behalf, that the proposal is most beneficial to the
Company.
(d)
Nothing in sub-clause (c) of (1) hereof shall be deemed:
(i)
To extend the time within which the offer should be
accepted; or
(ii)
To authorise any person to exercise the right of
renunciation for a second time on the ground that the person in
whose favour the renunciation was first made has declined to take
the shares comprised in the renunciation.
(e)
Nothing in this Article shall apply to the increase of the
subscribed capital of, the company caused by the exercise of an
option attached to the debenture issued or loans raised by the
Company :
(i)
To convert such debentures or loans into shares in the
Company; or
(ii)
To subscribe for shares in the Company (whether such
option is conferred in these Articles or otherwise).
PROVIDED THAT the terms of issue of such debentures or the
terms of such loans include a term providing for such option and
such term;
(i)
Either has been approved by the Central Government
before the issue of the debentures or the raising of the loans or is in
conformity with the Rules, if any, made by that Government in this
behalf; and
(ii)
in the case of debentures or loans or other than debentures
issued to or loans obtained from Government or any institution
specified by the Central Government in this behalf, has also been
approved by a special resolution passed by the company in
General Meeting before the issue of the debentures or raising of
the loans.
Directors may allot shares as fully paid up
(f)
Subject to the provisions of the Act and these Articles, the
Directors may issue and allot shares in the capital of the Company
on payment or part payment for any property or assets of any kind
whatsoever sold or transferred, goods or machinery supplied or for
services rendered to the company in the conduct of its business
and any shares which may be so allotted may be issued as fully
paid up or partially paid up otherwise than in cash, and if so issued,
shall be deemed to be fully paid up or partly paid up shares as the
case may be.
Same as original capital
(g)
Except so far as otherwise provided by the conditions of
issue or by these presents, any capital raised by the creation of
new shares shall be considered as part of the original capital and
shall be subject to the provisions herein contained with reference to
249
Provisions to apply on
issue of Redeemable
Preference Shares.
10
the payment of calls, installments, transfers, transmission,
forfeiture, lien, surrender, voting and otherwise.
Power to issue Redeemable Preference Shares
(a) Subject to the provisions of Section 80 of the Act and subject to
the provisions on which any shares may have been issued, the
Company may issue preference shares, which are or at the option
of the Company are liable to be redeemed within the period of
fifteen years and the resolution authorizing such issue prescribe the
manner, terms and conditions of redemption, the following
provisions shall apply for issue
(i) no such shares shall be redeemed except out of the profits of the
Company which would otherwise be available for dividend or out of
the proceeds of a fresh issue of Shares made for the purpose of
redemption;
(ii) no such shares shall be redeemed unless they are fully paid;
(iii) The premium, if any, payable on redemption shall have been
provided for out of the profits of the Company or out of the
Company’s share premium account before the shares are
redeemed.
(iv) Where any such shares are redeemed otherwise than out of the
proceeds of a fresh issue, there shall, out of profits which would
otherwise have been available for dividend, be transferred to a
reserve fund, to be called “the capital redemption reserve account”,
a sum equal to the nominal amount of the shares redeemed; and
the provisions of the Act relating to the reduction of the share
capital of the Company shall, except as provided in Section 80 of
the Act, apply is if the capital redemption reserve account were paid
up share capital of the Company.
(b) Subject to the provisions of Section 80 of the Act and subject to
the provisions on which any shares may have been issued, the
redemption of preference shares may be effected on such terms
and in such manner as may be provided in these Articles or by the
terms and conditions of their issue and subject thereto in such
manner as the Directors may think fit.
(c) The redemption of preference shares under these provisions by
the company shall not be taken as reducing the amount of its
Authorised Share Capital.
(d) Where in pursuance of this Article, the Company has redeemed
or is about to redeem any preference shares, it shall have power to
issue shares upto the nominal amount of the shares redeemed or
to be redeemed as if those shares had never been issued; and
accordingly the Share Capital of the Company shall not, for the
purpose of calculating the fees payable under Section 611 of the
Act, be deemed to be increased by the issue of shares in
pursuance of this clause.
Provided that where new shares are issued before redemption of
the old shares, the new shares shall not so far as relates to stamp
duty be deemed to have been issued in pursuance of this clause
unless the old shares are redeemed within one month after the
250
Provision in case of
Redemption of
Preference Shares
11
Reduction of capital
12
issue of the new shares.
(e) The Capital Redemption Reserve Account may, notwithstanding
anything in this Article, be applied by the Company, in paying up
un-issued shares of the Company to be issued to members of the
Company as fully paid bonus shares.
The Company shall be at liberty at any time, either at one time or
from time to time as the Company shall think fit, by giving not less
than six months’ previous notice in writing to the holders of the
preference shares to redeem at par the whole or part of the
preference shares for the time being outstanding, by payment of
the nominal amount thereof with dividend calculated upto the date
or dates notified for payment (and for this purpose the dividend
shall be deemed to accrue and due from day to day) and in the
case of redemption of part of the preference shares the following
provisions shall take effect:
(a) The shares to be redeemed shall be determined by drawing of
lots which the Company shall cause to be made at its registered
office in the presence of one Director at least; and
(b) Forthwith after every such drawing, the Company shall notify the
shareholders whose shares have been drawn for redemption its
intention to redeem such shares by payment at the registered office
of the Company at the time and on the date to be named against
surrender of the Certificates in respect of the shares to be so
redeemed and at the time and date so notified each such
shareholder shall be bound to surrender to the Company the Share
Certificates in respect of the Shares to be redeemed and thereupon
the Company shall pay the amount payable to such shareholders in
respect of such redemption. The shares to be redeemed shall
cease to carry dividend from the date named for payment as
aforesaid. Where any such certificate comprises any shares which
have not been drawn for redemption, the Company shall issue to
the holder thereof a fresh certificate therefore.
Power to Issue Sweat Equity Shares
(c)The Board shall have a power to issue sweat equity shares in
manner and subject to conditions contained in section 79 (A) of the
Act.
The Company may from time to time by special resolution, subject
to confirmation by the Court and subject to the provisions of
Sections 78, 80 and 100 to 104 of the Act, reduce its share capital
and any Capital Redemption Reserve Account or Share premium
account in any manner for the time being authorised by law and in
particular without prejudice to the generality of the foregoing power
may be:
(a) extinguishing or reducing the liability on any of its shares in
respect of Share Capital not paid up;
(b) either with or without extinguishing or reducing liability on any of
its shares, cancel paid up share capital which is lost or is
unrepresented by available assets; or
(c) either with or without extinguishing or reducing liability on any of
251
Division, SubDivision,
Consolidation,
Conversion and
Cancellation of
shares
13
Notice to Registrar of
Consolidation of
Share Capital,
Conversion of shares
into stocks etc.
14
Modifications of rights
15
its shares, pay off any paid up share capital which is in excess of
the wants of the Company;
and may, if and so far as is necessary, after its Memorandum by
reducing the amount of its share capital and of its shares
accordingly.
Subject to the provisions of Section 94 of the Act, the Company in
general meeting may by an ordinary resolution alter the conditions
of its Memorandum as follows, that is to say, it may:
(a) consolidate and divide all or any of its Share Capital into shares
of larger amount than its existing shares;
(b) sub-divide its shares or any of them into shares of smaller
amount than originally fixed by the Memorandum subject
nevertheless to the provisions of the Act in that behalf and so
however that in the sub-division the proportion between the amount
paid and the amount if any, unpaid on each reduced share shall be
the same as it was in the case of the share from which the reduced
share is derived and so that as between the holders of the shares
resulting from such sub-division one or more of such shares may,
subject to the provisions of the Act, be given any preference or
advantage over the others or any other such shares.
(c) convert, all or any of its fully paid up shares into stock, and reconvert that stock into fully paid up shares of any denomination.
(d) cancel, shares which at the date of such general meeting have
not been taken or agreed to be taken by any person, and diminish
the amount of its share capital by the amount of the shares so
cancelled. A cancellation of shares in pursuance of this sub-clause
shall not be deemed to be reduction of share capital within the
meaning of the Act.
(a) If the Company has :
(i) consolidated and divided its Share Capital into shares of larger
amount than its existing shares;
(ii) converted any shares into stock;
(iii) reconverted any stock into shares;
(iv) sub-divided its share or any of them;
(v) redeemed any redeemable preference shares; or
(vi) Cancelled any shares otherwise than in connection with a
reduction of Share Capital under Sections 100 to 104 of the Act.
the Company shall within one month after doing so, give notice
thereof to the Registrar specifying as the case may be, the shares
consolidated, divided, converted, sub-divided, redeemed or
cancelled or the stocks reconverted.
(b) the Company shall thereupon request the Registrar to record
the notice and make any alterations which may be necessary in the
Company’s Memorandum or Articles or both.
If at any time the share capital by reason of the issue of Preference
Share or otherwise, is divided into different classes of shares, all or
any of the rights and privileges attached to any class (unless
otherwise provided by the terms of issue of the shares of that class)
may, subject to the provisions of Sections 106 and 107 of the Act
252
Issue of further
shares not to affect
right of existing
shareholders
16
Provisions of
Sections 85 to 88 of
the Act to apply
17
Commencement of
business
Restriction on
allotment and Return
of Allotment
18
Shares to be
numbered
progressively and no
shares to be subdivided
Share at the disposal
of the
Directors/Shares
under control of
20
19
21
and whether or not the Company is being wound up, be varied,
modified, commuted, affected or abrogated with the consent in
writing of the holders of three-fourths in nominal value of the issued
shares of that class or with the sanction of a Special Resolution
passed at a separate general meeting of the holders of the shares
of that class. This Article shall not derogate from any power which
the Company would have if this Article is omitted. The provisions of
these Articles relating to general meetings shall mutais mutandis
apply to every such separate meeting but so that if at any
adjourned meeting of such holders a quorum as defined in Articles
102 is not present, those persons who are present shall be quorum.
The rights or privileges conferred upon the holders of the shares of
any class issued with preference or other rights, shall not unless
otherwise be deemed to be varied or modified or affected by the
creation or issue of further shares ranking pari passu therewith.
The provisions of Sections 85 to 88 of the Act in so far as the same
may be applicable shall be observed by the Company.
Register and Index of members and Debenture holders
Register of Members and Debenture holders
(a) The Company shall cause to be kept a Register of Members
and an Index of Members in accordance with Sections 150 and 151
of the Act and Register and Index of Debenture holders in
accordance with Section 152 of the Act. The Company may also
keep a foreign Register of Members and Debenture holders in
accordance with Section 157 of the Act. The Company shall be
entitled to keep in any State or Country outside India a branch
register of members resident in that State or Country.
(b) The Company shall also comply with provisions of Sections 159
and 161 of the Act as to filling of Annual Returns.
(c) The Company shall duly comply with the provisions of Section
163 of the Act in regard to keeping of the Registers, Indexes,
copies of Annual Returns and giving inspection thereof and
furnishing copies thereof.
The Company shall comply with the provisions of Section 149 of
the Act.
The Board shall observe the restriction as to allotment of shares to
the public contained in Sections 69 and 70 of the Act and shall
cause to be made the return as to allotment provided for in Section
75 of the Act.
The shares in the Capital shall be numbered progressively
according to the several denominations and except in the manner
hereinbefore mentioned no share shall be subdivided. Every
forfeited or surrendered share shall continue to bear the number by
which the same was originally distinguished.
Subject to the provisions of Section 81 of the Act and these Articles
the shares in the Capital of the Company for the time being shall be
under the control of the Directors who may issue, allot or otherwise
dispose of the same or any of them to such persons, in such
253
Directors
Every share
transferable etc
22
Application of
premium received on
issue of shares
23
proportion and on such terms and conditions and either at a
premium or at par or (subject to compliance with the provisions of
Section 79 of the Act) at a discount and at such time as they may
from time to time think fit and with the sanction of the Company in
general meeting to give to any person the option to call for any
shares either at par or at a premium during such time and for such
consideration as the Directors think fit, and may issue and allot
shares in the capital of the Company on payment in full or part for
any property sold and transferred or for services rendered to the
Company in the conduct of its business and any shares which may
be so allotted may be issued as fully paid up shares and if so
issued, shall be deemed to be fully paid shares.. Subject to the
Compliance of provisions of section 81(lA) or any other provisions
of the Company read with the rules or regulations and guidelines
framed there under, if any, the Company have an authority to
create, other, issue or allot to or for the benefit of any person(s) or
Company(ies) or body(ies) corporate including Promoters or
Directors or relatives and friends of Directors or employees of the
Company, shares of securities of any kind whether convertible or
non-convertible into shares, or warrants giving an option to holder
thereof to subscribe to shares or securities of any kind whether
convertible or non-convertible into shares, on such terms and
conditions including condition as to price as may be determine by
the general meeting authorizing issue/offer and allotment of such
shares or securities on preferential basis or private placement basis
or in any manner and where no such terms and conditions
determined by the general meeting, on such terms and conditions
including the conditions as to price as may be determined by the
Board of Directors
(i)
The shares or other interest of any member in the
Company shall be a movable property, transferable in the manner
provided by the Articles.
(ii)
Each share in the Company shall be distinguished by its
appropriate number.
(iii)
A Certificate under the Common Seal of the Company,
specifying any shares held by any member shall be prima facie,
evidence of the title of the member of such shares.
(a)
Where the Company issues shares at a premium, whether
for cash or otherwise, a sum equal to the aggregate amount or
value of the premium on those shares shall be transferred to an
account to be called “the share premium account” and the
provisions of the Act relating to the reduction of the Share Capital of
the Company shall except as provided in this Article, apply as if the
share premium account were paid up share capital of the
Company.
(b)
The Share premium account may, notwithstanding,
anything in clause (a) above, be applied by the Company:
(i)
in paying up un-issued shares of the Company to be issued
to members of the company as fully paid bonus shares;
254
Sale of fractional
shares
24
Acceptance of Shares
25
Deposits and calls
etc, to be a debt
payable immediately
26
Trusts not recognised
27
(ii)
in writing off the preliminary expenses of the Company;
(iii)
in writing off the expenses of, or the commission paid or
discount allowed on, any issue of shares or debentures of the
company; or
(iv)
in providing for the premium payable on the redemption of
any redeemable preference shares or of any debenture of the
Company.
If and whenever, as the result of issue of new or further shares or
any consolidation or sub-division of shares, any share are held by
members in fractions, the Directors shall, subject to the provisions
of the Act and the Articles and to the directions of the Company in
general meeting, if any, sell those shares, which members hold in
fractions, for the best price reasonably obtainable and shall pay and
distribute to and amongst the members entitled to such shares in
due proportion, the net proceeds of the sale thereof. For the
purpose of giving effect to any such sale the Directors may
authorise any person to transfer the shares sold to the purchaser
thereof, comprised in any such transfer and he shall not be bound
to see to the application of the purchase money nor shall his title to
the shares be affected by any irregularity or invalidity in the
proceedings in reference to the sale.
(a)An application signed by or on behalf of an applicant for shares
in the Company, followed by an allotment of any shares therein
shall be an acceptance of shares within the meaning of these
Articles and every person who thus or otherwise accepts any
shares and whose name is on the Register of Members shall for the
purpose of these Articles be a member. The Director shall comply
with the provisions of Sections 69, 70, 71, 72 and 73 of the Act in
so far as they are applicable.
Power of Company to purchase its own Securities
(b)Notwithstanding anything contained in the Act, but subject to the
provision of Sub-section (2) and Section 77 B of the Act, the
Company shall have power to purchase its own shares or other
specified securities (Referred to as Buy-Back) from.
(A)Out of free Reserve or,
(B)Out of Share Premium Account or,
(C)Out of proceeds of an earlier Issue other than fresh Issue of
share made specifically for the purpose of Buy-Back Shares.
The money (if any) which the Board shall, on the allotment of any
shares being made by them, require or direct to be paid by way of
deposit, call or otherwise in respect of any shares allotted by them,
immediately, on the insertion of the name of the allottee in the
Register of Members as the name of the holder of such shares
become a debt, due to and recoverable by the Company from the
allottee thereof, and shall be paid by him accordingly.
Save as herein provided, the Company shall be entitled to treat the
person whose name appears on the Register of Members as the
holder of any share as the absolute owner thereof, and accordingly
shall not (except as ordered by a Court of competent jurisdiction or
255
Issue of Certificate of
Shares to be
governed by Section
84 of the Act etc
28
Limitation of time of
issue of certificate
29
Issue of new
certificate in place of
one defaced, lost or
destroyed
30
as by law required) be bound to recognise any benami, trust of
equity or equitable, contingent, future, or partial or other claim or
claims or right to or interest in such share on the part of any other
person whether or not it shall have express or implied notice
thereof and the provisions of Section 153 of the Act shall apply.
(a) The issue of certificates of shares or of duplicate or renewal of
certificates of Shares shall be governed by the provisions of
Section 84 and other provisions of the Act, as may be applicable
and by the Rules or notifications or orders, If any, which may be
prescribed or made by competent authority under the Act or Rules
or any other law. The Directors may also comply with the provisions
of such rules or regulations of any stock exchange where the
shares of the Company may be listed for the time being.
Certificate of Shares
(b) The certificate of title to shares shall be issued under the Seal of
the Company and shall be signed by such Directors or Officers or
other authorised persons as may be prescribed by the Rules made
under the Act from time to time and subject thereto shall be signed
in such manner and by such persons as the Directors may
determine from time to time.
(c) The Company shall comply with all rules and regulations and
other directions which may be made by any competent authority
under Section 84 of the Act.
(a) Every member shall be entitled, without payment, toreceive one
Certificate for all the Shares of each class or denomination
registered in his name, or if the Directors so approve (upon paying
such fee as the Directors may from time to time determine) to
several certificates, each for one or more of such shares and the
Company shall complete and have ready for delivery such
Certificates within the time provided by Section 113 of the Act
unless the conditions of issue thereof otherwise provide. Every
certificate of shares shall be under the seal of the Company and
shall specify the number and distinctive numbers of the shares in
respect of which it is issued and the amount paid up thereon and
shall be in such form as the Director shall prescribe or approve
provided that in respect of a Share or shares held jointly by several
persons, the Company shall not be bound to issue more than one
certificate and delivery of a certificate of shares to one of several
joint holders shall be sufficient delivery to all such holders.
(b) Notwithstanding anything contained in Clause (a) above the
Directors shall, however, comply with such requirements of the
Stock Exchange where Shares of the Company may be listed or
such requirements of any rules made under the Act or such
requirements of the Securities Contracts (Regulation) Act, 1956 as
may be applicable.
If any certificate be worn out, defaced, mutilated or torn or if there
be no further space on the back thereof for endorsement of
transfer, then upon production and surrender thereof to the
Company, a new certificate may be issued in lieu thereof, and if any
256
Interest out of Capital
Power to pay certain
commission
and
prohibition
of
payment of all other
commissions,
discounts etc.
31
32
Certificate be lost or destroyed then upon proof thereof to the
satisfaction of the Company and on execution of such indemnity as
the Company deem adequate, being given, a new Certificate in lieu
thereof shall be given to the party entitled to such lost or destroyed
Certificate. Every certificates under this Article shall be issued
without payment of fees if the Directors so decide, or on payment of
such fees (not exceeding Re.1/- for each certificate) as the
Directors shall prescribe. Out-of-pocket expenses incurred by the
Company in investigating the evidence as to the loss or destruction
shall be paid to the Company if demanded by the Directors.
Provided that notwithstanding what is stated above the
Directors shall comply with such Rules or Regulations or
requirements of any Stock Exchange or the Rules made under the
Act or the Rules made under Securities Contract (Regulation) Act,
1956 or any other Act, or Rules applicable in this behalf.
The provision of this Article shall mutatis mutandis apply to
debenture of the Company.
Where any shares are issued for the purposes of raising money to
defray the expenses of the construction of any works or building or
the provisions of any plant, which cannot be made profitable for
lengthy period, the Company may pay interest on so much of that
share capital as is for the time being paid up, for the period, at the
rate and subject to the conditions and restrictions provided by
Section 208 of the Act and may charge the same to capital as part
of the cost of construction of the work or building or the provision of
the plant.
[A] The Company may pay a commission to any person in
consideration of :
(i) his subscribing or agreeing to subscribe whether absolutely or
conditionally, for any shares in or debentures of the Company,
subject to the restrictions specified in sub-section (4A) of Section
76 of the Act, or
(ii) his procuring or agreeing to procure subscriptions, whether
absolute or conditional for any shares in or debentures of the
Company, if the following conditions are fulfilled, namely :
(a) the commission paid or agreed to be paid does not exceed in
the case of shares, five percent of the price at which the shares are
issued and in the case of debentures, two and half percent of the
price at which the debentures are issued;
(b) the amount or rate percent of the commission paid or agreed to
be paid on shares or debentures offered to the public for
subscription, is disclosed in the Prospectus, and in the case of
shares or debentures not offered to the public for subscription, is
disclosed in the Statement in lieu of Prospectus and filed before the
payment of the commission with the Registrar, and where a circular
or notice, not being a Prospectus inviting subscription for the
shares or debentures is issued is also disclosed in that circular or
notice;
(c) the number of shares or debentures which such persons have
257
agreed for a commission to subscribe, absolutely or conditionally is
disclosed in the manner aforesaid and
(d) a copy of the contract for the payment of commission is
delivered to the Registrar at the time of delivery of the prospectus
or the statement in lieu of prospectus for registration.
[B] Save as aforesaid and save as provided in Section 75 of the
Act, the Company shall not allot any of its shares or debentures or
apply any of its moneys, either directly or indirectly, in payment of
any commission, discount or allowance, to any person in
consideration of :
(i) his subscribing or agreeing to subscribe, whether absolutely or
conditionally, for any shares in, or debentures of the Company or;
(ii)his procuring or agreeing to procure subscriptions, whether
absolutely or conditionally, for any shares in, or debentures of the
Company whether the shares, debentures or money be so allotted
or applied by, being added to the purchase money of any property
acquired by the Company or to the contract price of any work to be
executed for the Company or the money be paid out of the nominal
purchase money or contract price, or otherwise.
[C] Nothing in this Article shall affect the power of the Company to
pay such brokerage as it has hereto before been lawful for the
Company to pay.
[D] A vendor to, promoter of, or other person who receives payment
in shares, debentures or money from the Company shall have and
shall be deemed always to have had power to apply any part of the
shares, debentures or money so received for payment of any
commission, the payment of which, if made directly by the
Company would have been legal under Section 76 of the Act.
[E] The commission may be paid or satisfied (subject to the
provisions of the Act and these Articles) in cash, or in shares,
debentures or debenture-stocks of the Company.
CALLS
Director may make
calls
33
Calls to date from
resolution
34
The Directors may from time to time and subject to Section 91 of
the Act and subject to the terms on which any shares/debentures
may have been issued and subject to the conditions of allotment,
by a resolution passed at a meeting of the Board (and not by
circular resolution) make such calls as they think fit upon the
members/debenture holders in respect of all moneys unpaid on the
shares/debentures held by them respectively and such
member/debenture holders shall pay the amount of every call so
made on him to the persons and at the times and places appointed
by the Directors. A call may be made payable by installments. A
call may be postponed or revoked as the Board may determine.
A call shall be deemed to have been made at the time when the
resolution of the Directors authorising such call was passed and
may be made payable by members/debenture holders on a
subsequent date to be specified by the Directors.
258
Notice of call
35
Directors may extend
time
36
Sums deemed to be
calls
37
Installments
on
shares to be duly paid
38
Calls on shares of the
same class to be
made on uniform
basis
39
Thirty days notice in writing shall be given by the Company of every
calls made payable otherwise than on allotment specifying the time
and place of payment provided that before the time of payment of
such call, the Directors may by notice in writing to the
members/debenture holders revoke the same.
The Directors may, from time to time, at their discretion, extend the
time fixed for the payment of any call, and may extend such time as
to all or any of the members/debenture holders who from residence
at a distance or other cause, the Directors may deem fairly entitled
to such extension, but no member/debenture holder shall be
entitled to such extension, save as a matter of grace and favor.
Any sum, which by the terms of issue of share/debenture becomes
payable on allotment or at any fixed date whether on account of the
nominal value of the share/debenture or by way of premium, shall
for the purposes of these Articles be deemed to be a call duly made
and payable on the date on which by the terms of issue the same
becomes payable, and in case of non-payment, all the relevant
provisions of these Articles as to payment of interest and expenses,
forfeiture or otherwise, shall apply as if such sum had become
payable by virtue of a call duly made and notified.
If by the condition of allotment of any shares the whole or part of
the amount of issue price thereof shall be payable by installments,
every such installment shall, when due, be paid to the Company by
the person who, for the time being and from time to time, shall be
the registered holder of the share of his legal representative.
Where any calls for further Share Capital are made on shares, such
calls shall be made on a uniform basis on all shares falling under
the same class.
Explanation : For the purpose of this provisions, shares of the same
nominal value on which different amounts have been paid up shall
not be deemed to fall under the same class.
Liability of joint holders of share
Liability
of
joint
holders of share
40
When interest on call
or Installment payable
41
Partial payment not to
42
The joint holders of a share shall be severally as well as jointly
liable for the payment of all installment and calls due in respect of
such shares.
If the sum payable in respect of any call or installment be not paid
on or before the day appointed for payment thereof or any such
extension thereof, the holder for the time being or allottee of the
share in respect of which a call shall have been made or the
installment shall be due, shall pay interest as shall be fixed by the
Board from the day appointed for the payment thereof or any such
extension thereof to time of actual payment but the Directors may
waive payment of such interest wholly or in part.
Neither a judgment nor a decree in favour of the Company for calls
259
preclude forfeiture
Proof on trial of suits
for money due on
shares
43
Payment
in
anticipation of calls
may carry interest
44
or other moneys due in respect of any shares nor any part payment
or satisfaction thereof nor the receipt by the Company of a portion
of any money which shall from time to time be due from any
member in respect of any shares either by way of principal or
interest nor any indulgence granted by the Company in respect of
payment of any such money shall preclude the forfeiture of such
shares as herein provided.
On the trial or hearing of any action or suit brought by the Company
against any member or his legal representative for the recovery of
any money claimed to be due to the Company in respect of any
shares it shall be sufficient to prove that the name of the member in
respect of whose shares the money is sought to be recovered
appears in the Register of Members as the holder or one of the
holders, at or subsequent to the date at which the money sought to
be recovered is alleged to have become due, of the shares in
respect of which such money is sought to be recovered, and that
the resolution making the call is duly recorded in the Minutes Book;
and that the notice of such call was duly given to the member or his
representatives, sued in pursuance of these presents; and it shall
not be necessary to prove the appointment of the Directors who
made such calls nor that a quorum of Directors was present at the
Board at which any call was made, nor that the meeting at which
any call was made was duly convened or constituted nor any other
matters whatsoever, but the proof of the matters aforesaid shall be
conclusive evidence of the debt.
(a) The Directors may, if they think fit, subject to the provision of
Section 92 of the Act, agree to and receive from any member
willing to advance the same whole or any part of the moneys due
upon the shares held by him beyond the sums actually called for,
and upon the amount so paid or satisfied in advance, or so much
thereof as from time to time exceeds the amount of the calls then
made upon the shares in respect of which such advance has been
made, the Company may pay interest at such rate, to the member
paying such sum in advance and the Directors agree upon provided
that money paid in advance of calls not confer a right to participate
in profits or dividends. The Directors may at any time repay the
amount so advanced.
(b) The member shall not however be entitled to any voting rights in
respect of the moneys so paid by him until the same would but for
such payment, become presently payable.
(c)The provisions of these Articles shall mutatis mutandis apply to
the calls on debentures of the Company.
Term of issue of Debenture
260
Partial payment not to
preclude forfeiture
45
Any debentures, debenture-stock or other securities may be issued
at a discount, premium or otherwise and may be issued on
condition that they shall be convertible into shares of any
denomination and with any privileges and conditions as to
redemption, surrender, drawing, allotment of shares, attending (but
not voting) at the General Meeting, appointment of Directors and
otherwise Debentures with the right to conversion into or allotment
of shares shall be issued only with the consent of the Company in
the General Meeting by a Special Resolution.
Company’s lien on
Shares/Debentures
46
As to enforcing lien
by sale
47
Application
proceeds of sale
48
. The Company shall have first and paramount lien upon all the
shares/debentures (other than fully paid up shares/debentures)
registered in the name of each member/debenture holder (whether
solely or jointly with others) and upon the proceeds of sale thereof
for all moneys (whether presently payable or not) called or payable
at a fixed time in respect of such shares/debentures and no
equitable interest in any shares/debentures shall be created except
upon the footing and condition that Article 25 hereof will have full
effect. And such lien shall extend to all dividends and bonuses from
time to time declared in respect of such shares/debentures. Unless
otherwise agreed the registration of a transfer of share/debentures
shall operate as a waiver of the Company’s lien if any on such
shares/debentures. The Directors may at any time declare any
shares/debentures wholly or in part to be exempt from the
provisions of this Clause.
For the purpose of enforcing such lien, the Board may sell the
shares/debentures subject thereto in such manner as they shall
think fit, and for that purpose may cause to be issued a duplicate
certificate in respect of such shares and/or debentures and may
authorise one of their member or appoint any officer or agent to
execute a transfer thereof on behalf of and in the name of such
member/debenture holder. No sale shall be made until such period,
as may be stipulated by the Board from time to time, and until
notice in writing of the intention to sell shall have been served on
such member and/or debenture holder or his legal representatives
and default shall have been made by him or them in payment,
fulfillment, or discharge of such debts, liabilities or engagements for
fourteen days after such notice.
(a) The net proceeds of any such sale shall be received by the
Company and applied in or towards payment of such part of the
amount in respect of which the lien exists as is presently payable
and the residue if any, shall (subject to a like lien for sums not
presently payable as existed upon the shares before the sale) be
paid to the persons entitled to the shares and/or debentures at the
date of the sale.
LIEN
of
Outsiders lien not to affect Company’s lien
261
(b) The Company shall be entitled to treat the registered holder of
any share or debenture as the absolute owner thereof and
accordingly shall not (except as ordered by a Court of competent
jurisdiction or by statute required) be bound to recognise equitable
or other claim to, or interest in, such shares or debentures on the
part of any other person. The Company’s lien shall prevail
notwithstanding that it has received notice of any such claims.
FORFEITURE
If call or installment
not paid notice must
be given
49
(a) If any member or debenture holder fails to pay the whole or any
part of any call or installment or any money due in respect of any
share or debentures either by way of principal or interest on or
before the day appointed for the payment of the same or any such
extension thereof as aforesaid, the Directors may at any time
thereafter, during such time as the call or any installment or any
part thereof or other moneys remain unpaid or a judgment or
decree in respect thereof remains unsatisfied in whole or in part,
serve a notice on such member or debenture holder or on the
person (if any) entitled to the share by transmission requiring him to
pay such call or installment or such part thereof or other moneys as
remain unpaid together with any interest that may have accrued
and all expenses that may have been incurred by the Company by
reason of such non-payment.
Form of Notice
In default of payment
shares or debentures
to be forfeited
50
(b) The notice shall name a day not being less than one month from
the date of the notice and a place or places, on and at which such
call, or installment or such part or other moneys as aforesaid and
such interest and expenses as aforesaid are to be paid. The notice
shall also state that in the event of non payment of call amount with
interest at or before the time and at the place appointed, the shares
or debentures in respect of which the call was made or installment
or such part or other moneys is or are payable will be liable to be
forfeited.
If the requirements of any such notice as aforesaid are not
complied with any share/debenture in respect of which such notice
has been given, may at any time thereafter before payment of all
calls or installments, interest and expenses or other moneys due in
respect thereof, be forfeited by a resolution of the Directors to that
effect. Neither the receipt by the Company of a portion of any
money which shall from time to time be due from any member of
the Company in respect of his shares, either by way of principal or
interest, nor any indulgence granted by the company, in respect of
the payment of any such money, shall preclude the company from
thereafter proceeding to enforce a forfeiture of such shares as
herein provided. Such forfeiture shall include all dividends declared
262
Entry of forfeiture in
Register
of
member/debenture
holders
51
Forfeited
share/debenture to be
property of Company
and may be sold
Power
to
annul
forfeiture
52
Shareholders
or
Debenture
holders
still liable to pay
money owing at time
of
forfeiture
and
interest
54
Effect of forfeiture
55
Certificate
forfeiture
of
53
56
or interest paid or any other moneys payable in respect of the
forfeited shares or debentures and not actually paid before the
forfeiture.
When any shares/debenture shall have been so forfeited, notice of
the forfeiture shall be given to the member or debenture holder in
whose name in stood, immediately prior to the forfeiture and an
entry of the forfeiture with the date thereof, shall forthwith be made
in the Register of members or debenture holders but no forfeiture
shall be invalidated by any omission or neglect or any failure to give
such notice or make such entry as aforesaid
Any share or debenture so forfeited shall be deemed to be the
property of the Company, and may be sold, re-allotted or otherwise
disposed of either to the original holder or to any other person upon
such terms and in such manner as the Directors shall think fit.
The Directors may, at any time, before any share or debenture so
forfeited shall have been sold, re-allotted or otherwise disposed of,
annul forfeiture thereof upon such conditions as they think fit.
Any member or debenture holder whose shares or debentures
have been forfeited shall, notwithstanding the forfeiture, be liable to
pay and shall forthwith pay to the Company, all calls, installments,
interest expenses and other money owing upon or in respect of
such shares or debentures at the time of the forfeiture together with
interest thereon from the time of the forfeiture until payment at such
rate as the Directors may determine, and the Directors may enforce
the payment of the whole or a portion thereof, if they think fit, but
shall not be under any obligation to do so.
The forfeiture of a share or debenture shall involve extinction at the
time of forfeiture, of all interest in and all claims and demands
against the Company, in respect of the share or debenture and all
other rights incidental to the share or debenture, except only such
of those rights as by these Articles are expressly saved.
A Certificate in writing under the hand of one Director and counter
signed by the Secretary or any other officer authorised by the
Directors for the purpose, that the call in respect of a Share or
debenture was made and notice thereof given and that default in
payment of the call was made and that the forfeiture of the share or
debenture was made by the resolution of Directors to that effect
shall be conclusive evidence of the facts stated therein as against
all persons entitled to such share or debenture.
Validity of sales under Articles 45 and 50
Validity of sales under
Articles 45 and 50
57
Upon any sale after forfeiture or for enforcing a lien in purported
exercise of the powers hereinabove given, the Directors may, if
necessary, appoint some person to execute an instrument of
transfer of the shares or debentures sold and cause the
purchaser’s name to be entered in the Register of members or
Register of debenture holders in respect of the shares or
debentures sold, and the purchaser shall not be bound to see to the
263
Cancellation
of
share/debenture
Certificate in respect
of
forfeited
shares/debentures
58
Title of purchaser and
allottee of forfeited
shares/debentures
59
Surrender of Shares
or Debentures
60
regularity of the proceedings, or to the application of the purchase
money and after his name has been entered in the Register of
members or debenture holders in respect of such shares or
debentures the validity of the sale shall not be impeached by any
person, and the remedy of any person aggrieved by the sale shall
be for damages only and against the Company exclusively.
Upon any sale, re-allotment or other disposal under the provisions
of the preceding Articles, the certificate/s originally issued in
respect of the relative shares or debentures shall (unless the same
shall on demand by the Company has been previously surrendered
to it by the defaulting member or debenture holder) stand cancelled
and become null and void and be of no effect, and the Directors
shall be entitled to issue a duplicate certificate/s in respect of the
said shares or debentures to the person/s entitled thereto.
The Company may receive the consideration, if any, given for the
share or debenture
on any sale, re-allotment of other disposition thereof, and the
person to whom such
share or debenture is sold, re-allotted or disposed of may be
registered as the holder of the share or debenture and shall not be
bound to see to the application of the consideration, if any, nor shall
his title to the share or debenture be affected by any irregularity or
invalidity in the proceedings in reference to the forfeiture, sale, reallotment or other disposal of the share or debenture.
The Directors may, subject to the provisions of the Act, accept a
surrender of any share or debenture from or by any member or
debenture holder desirous of surrendering them on such terms as
they think fit.
TRANSFER AND TRANSMISSION OF SHARES AND DEBENTURES
Register of transfers
61
Form of transfer
62
Instrument of transfer
to be executed by
transferor
and
transferee
63
The company shall keep a book to be called the “Register of
Transfers” and therein shall be fairly and distinctly entered the
particulars of every transfer or transmission of any share .
The instrument of transfer shall be in writing and all the provisions
of Section 108 of the Act, shall be duly complied with in respect of
all transfer of shares and registration thereof.
Every such instrument of transfer shall be signed both by the
transferor and transferee and the transferor shall be deemed to
remain the holder of such share until the name of the transferee is
entered in the Register of Members in respect thereof.
Directors may refuse to register transfer
Directors may refuse
to register transfer
64
(a) Subject to the provisions of Section 111 of the Act, the Directors
may, at their own absolute and uncontrolled discretion and by giving
reasons, decline to register or acknowledge any transfer of shares
whether fully paid or not and the right of refusal, shall not be affected
264
by the circumstances that the proposed transferee is already a
member of the Company but in such cases Directors shall within one
month from the date on which the instrument of transfer was lodged
with the Company, send to the transferee and transferor notice of
the refusal to register such transfer provided that registration of a
transfer shall not be refused on the ground of the transferor being
either alone or jointly with any other person or persons indebted to
the Company on any account whatsoever except when the
Company has a lien on the shares. Transfer of shares/debentures in
whatever lot shall not be refused.
Transfer of shares
65
(b) Nothing in Sections 108, 109 and 110 of the Act shall prejudice
this power to refuse to register the transfer of, or the transmission on
legal documents by operation of law of the rights to, any shares or
interest of a member in, any shares or debentures of the Company.
(a) An application of registration of the transfer of shares may be
made either by the transferor or the transferee provided that where
such application is made by the transferor, no registration shall in the
case of partly paid shares be effected unless the Company gives
notice of the application to the transferee and subject to the
provisions of Clause (d) of this Article, the Company shall unless
objection is made by the transferee within two weeks from the date
of receipt of the notice, enter in the Register of members the name
of the transferee in the same manner and subject to the same
conditions as if the application for registration was made by the
transferee.
(b) For the purpose of clause (a) above notice to the transferee shall
be deemed to have been duly given if sent by prepaid registered
post to the transferee at the address given in the instrument of
transfer and shall be deemed to have been duly delivered at the time
at which it would have been delivered to him in the ordinary course
of post.
(c) It shall not be lawful for the Company to register a transfer of any
shares unless a proper instrument of transfer duly stamped and
executed by or on behalf of the transferor and by or on behalf of the
transferee and specifying the name, address and occupation if any,
of the transferee has been delivered to the Company alongwith the
Certificate relating to the shares and if no such Certificate is in
existence, alongwith the letter of allotment of shares. The Directors
may also call for such other evidence as may reasonably be required
to show the right of the transferor to make the transfer provided that
where it is proved to the satisfaction of the Directors of the Company
that an instrument of transfer signed by the transferor and the
transferee has been lost, the Company may, if the Directors think fit,
on an application in writing made by the transferee and bearing the
stamp required by an instrument of transfer register the transfer on
such terms as to indemnity as the Directors may think fit.
265
(d) Nothing in clause (c) above shall prejudice any power of the
company to register as shareholder any person to whom the right to
any share has been transmitted by operation of law.
(e) The company shall accept all applications for transfer of
shares/debentures, however, this condition shall not apply to
requests received by the company;
(A)for splitting of a share or debenture certificate into several scripts
of very small denominations;
(B)proposals for transfer of shares/debentures comprised in a
share/debenture certificate to several parties involving, splitting of a
share/debenture certificate into small denominations and that such
split/transfer appears to be unreasonable or without any genuine
need.
(i)transfer of Equity shares/debentures made in pursuance of any
statutory provision or an order of a competent court of law;
(ii)the transfer of the entire Equity shares/debentures by an existing
shareholder/debenture holder of the Company holding under one
folio less than 10 (ten) Equity Shares or 10 (ten) debentures (all
relating to the same series) less than in market lots by a single
transfer to a single or joint transferee.
(jii) the transfer of not less than 10 (ten) Equity shares or 10 (ten)
debentures (all relating to the same series) in favour of the same
transferee(s) under two or more transfer deeds, out of which one or
more relate(s) to the transfer of less than 10 (ten) Equity Shares/ 10
(ten) debentures.
(iv) the transfer of less than 10 (ten) Equity shares or 10 (ten)
debentures (all relating to the same series) to the existing share
holder/debenture holder subject to verification by the Company.
Provided that the Board may in its absolute discretion waive the
aforesaid conditions in a fit and proper case(s) and the decision of
the Board shall be final in such case(s).
(f) Nothing in this Article shall prejudice any power of the Company
to refuse to register the transfer of any share.
Custody of Instrument
of transfer
66
(a)
The instrument of transfer shall after registration be retained by the
Company and shall remain in their custody. All instruments of
transfer which the Directors may decline to register, shall on demand
be returned to the persons depositing the same. The Directors may
cause to be destroyed all transfer deeds lying with the Company
266
after such period as they may determine.
(b)
(c)
Dematerialization/Rematerialisation
Notwithstanding anything contained in these Articles the Company
shall be entitled to dematerialise its securities and to offer securities
in a dematerialised from pursuant to the Depository Act, 1996.
Option for Investors
Every holder of or subscriber to securities of the Company shall
have the option to receive security certificates or to hold the
securities with a depository. Such a person who is the beneficial
owner of the Securities can at any time option out of a Depository, if
permitted, by the law, in respect of any security in the manner
provided by the Depositories Act, 1996 and the Company shall in the
manner and within the time prescribed, issued to the beneficial
owner the required Certificates for the Securities.
If a person opts to hold its Security with Depositary, the Company
shall intimate such depository the details of allotment of the Security.
Securities in Depository to be in fungible form
All securities of the Company held by the Depository shall be
dematerialized and be in fungible form.
(d)
Nothing contained in Sections 153, 153A, 153B, 187C and 372A of
the Act shall apply to a Depository in respect of the Securities of the
Company held by it on behalf of the beneficial owners.
Rights of Depositories and Beneficial Owners
(i)Notwithstanding any thing to the contrary contained in the Act a
Depository shall be deemed to be the registered owner for the
purpose of effecting transfer of ownership of Security of the
Company on behalf of the beneficial owner.
(e)
(ii) Save as otherwise provided in (i) above, the depository as the
registered owner of the Securities shall not have any voting rights or
any other rights in respect of the Securities held by it.
(iii)Every person holding Securities of the Company and whose
name is entered as the beneficial owner in the record of the
depository shall be deemed to be a member of the Company. The
beneficial owner of Securities shall be entitled to all the rights and
benefits and be subject to all the liabilities in respect of his Securities
which are held by a depository.
Service of Documents
Notwithstanding anything contained in the Act to the contrary, where
Securities of the Company are held in depository, the records of the
beneficial ownership may be served by such depository to the
267
Company by means of electronic mode or by delivery of floppies or
discs.
(f)
Transfer or Securities
Nothing contained in Section 108 of the Act, shall apply to a transfer
of Securities effect by a transferor and transferee both of whom are
entered as beneficial owners in the record of a depository.
(g)
(h)
(i)
Allotment of Securities dealt with in a depository
Notwithstanding anything contained in the Act, where Securities are
dealt with by a depository the Company shall intimate the details
thereof to the depository immediately on allotment of such securities.
Register and Index of Members
The company shall cause to be kept at its Registered Office or at
such other place as may be decided, Register and Index of
Members in accordance with Sections 150 and 151 and other
applicable provisions of the Act and the Depositories Act. 1996 with
the details of Shares held in physical and dematerialised forms in
any media as my be permitted by law including in any form of
electronic media. The Register and Index of beneficial owners
maintained by a-depository under Section 11 of the Depositories Act,
1996 shall be deemed to be the Register and Index of Members for
the purpose of this Act. The Company shall have the power to keep
in any state or country outside India, a Register of Members for the
residents in that state or Country.
Applicability of the depositories Act
In case of transfer of shares, debentures and other marketable
securities, where the Company has not issued any certificate and
where such shares, debentures or securities are being held in an
electronic and fungible form with a Depository, the provisions of the
Depositories Act, 1996 shall apply.
(j)
Transfer books and Register of members when closed
Applicability of the depositories Act
67
The Board shall have power on giving not less than
seven days’ previous notice by advertisement in some
newspaper circulating in the district in which the office
of the Company is situate, to close the Transfer books,
the Register of members or Register of debenture
holders at such time or times and for such period or
periods, not exceeding thirty days at a time and not
exceeding in the aggregate forty five days in each
268
Transfer to Minors etc.
68
Title to shares of deceased holder
69
Registration of persons entitled to
share otherwise than by transfer
70
(a)
year.
Only fully paid shares or debentures shall be
transferred to a minor acting through his/her legal or
natural guardian. Under no circumstances, shares or
debentures be transferred to any insolvent or a person
of unsound mind.
The executors or administrators of a deceased
member (not being one or two or more joint holders)
or the holder of a deceased member (not being one or
two or more joint holders) shall be the only persons
whom the Company will be bound to recognise as
having any title to the shares registered in the name of
such member, and the company shall not be bound to
recognise such executors or administrators or the
legal representatives unless they shall have first
obtained Probate or Letters of Administration or a
Succession Certificate, as the case may be, from a
duly constituted competent Court in India, provided
that in any case where the Directors in their absolute
discretion think fit, the Directors may dispense with the
production of Probate or Letter of Administration or a
Succession Certificate upon such terms as to
indemnity or otherwise as the Directors in their
absolute discretion may think necessary and under
Article 70 register the name of any person who claims
to be absolutely entitled to the shares standing in the
name of a deceased member, as a member.
Subject to the provisions of Articles 67 and 77 (d), any
person becoming entitled to any share in
consequence of the death, lunacy, bankruptcy or
insolvency of any member or by any lawful means
other than by a transfer in accordance with these
presents, may with the consent of the Directors (which
they shall not be under any obligation to give) upon
producing such evidence that he sustains the
character in respect of which he proposes to act under
this Article or of such titles as the Directors shall think
sufficient, either be registered himself as a member in
respect of such shares or elect to have some person
nominated by him and approved by the Directors
registered as a member in respect of such shares.
Provided nevertheless that if such person shall elect to
have his nominee registered he shall testify his
election by executing in favour of his nominee an
instrument of transfer in accordance with provisions
herein contained and until he does so, he shall not be
free from any liability in respect of such shares.
A transfer of the shares or other interest in the
269
(b)
Claimant to be entitled
advantage
to same
71
Persons entitled may receive dividend
without being registered as member
72
73
Refusal to register nominee
74
Directors may require evidence of
transmission
75
No Fee on transfer or transmission
76
Company of a deceased member thereof made by his
legal representative shall, although the legal
representative is not himself a member be as valid as
if he had been a member at the time of the execution
of the instrument of transfer.
The person becoming entitled to a share by reason of
the death, lunacy, bankruptcy or insolvency of the
holder shall be entitled to the same dividends and
others advantages to which he would be entitled as if
he were registered holder of the shares except that he
shall not before being registered as a member in
respect of the share, be entitled in respect of it, to
exercise any right conferred by membership in relation
to the meeting of the Company provided that the
Board may at any time give notice requiring any such
persons to elect either to be registered himself or to
transfer shares and if the notice is not complied within
sixty days, the Board may thereafter withhold payment
of all dividends, interests, bonuses or other moneys
payable in respect of the share until the requirements
of the notice have been complied with.
A person entitled to a share by transmission shall,
subject to the right of the Directors to retain such
dividends, bonuses or moneys as hereinafter provided
be entitled to receive, and may give a discharge for
any dividends, bonuses or other moneys payable in
respect of the share/ debenture.
Article 70 shall not prejudice the provisions of Articles
44 and 55.
The Directors shall have the same right to refuse on
legal ground to register a person entitled by
transmission to any shares or his nominee as if he
were the transferee named in an ordinary transfer
presented for registration
Every transmission of a share shall be verified in such
manner as the Directors may require, and the
Company may refuse to register any such
transmission until the same be so verified or until or
unless an indemnity be given to the Company with
regard to such registration which the Directors at their
discretion shall consider sufficient,
provided
nevertheless that there shall not be any obligation on
the Company or the Directors to accept any indemnity.
No fees shall be charged for registration of transfer,
probate, succession certificate and letters of
administration, certificate of death or marriage, power
of attorney or similar other documents
270
The Company not liable for disregard
of a notice prohibiting registration of
transfer
77
78
The Company shall incur no liability or responsibility
whatsoever in consequence of its registering or giving
effect to any transfer of shares made or purporting to
be made by any apparent legal owner thereof (as
shown or appearing in the Register of Members) to the
prejudice of persons having or claiming any equitable
right, title or interest to or in the said shares,
notwithstanding that the Company may have had
notice of such equitable right, title or interest or notice
prohibiting registration of such transfer and may have
entered such notice referred thereto in any book of the
Company and the Company shall not be bound or
required to regard or attend or give effect to any notice
which may be given to it of any equitable right, title or
interest or be under any liability whatsoever for
refusing or neglecting so to do, though it may have
been entered or referred to in some book of the
Company, but the Company shall nevertheless be at
liberty to regard and attend to any such notice and
give effect thereto if the Directors shall so think fit.
The provisions of these Articles shall mutatis mutandis
apply to the transfer or transmission by operation of
law, of debentures of the Company.
JOINT HOLDERS
JOINT HOLDERS
79
Where two or more persons are registered as the
holders of any shares/debentures, they shall be
deemed (so far as the Company is concerned) to hold
the same as joint tenants with benefits of survivorship
subject to the following and other provisions contained
in these Articles.
No transfer to more than four persons as joint-holders
(a) The joint holders of any share/debenture shall be
liable severally four persons as the holders of any
share/debenture.
Transfer by joint holders
(b) In the case of a transfer of shares/ debentures held
by joint holders, the transfer will be effective only if it is
made by all the joint holders.
Liability of joint holders
(c) The joint holders of any share/debenture shall be
liable severally as well as jointly for and in respect of
all calls or installments and other payments which
ought to be made in respect of such share/debenture.
271
Death of one or more joint holders
(d) On the death of any one or more of such joint
holders the survivor/ survivors shall be the only person
or persons recognised by the company as having any
title to the share/debenture, but the Directors may
require such evidence of death as they may deem fit,
and nothing herein contained shall be taken to release
the estate of a deceased joint holder from any liability
on shares/debentures held by him jointly with any
other person.
Receipt of one sufficient
(e) Any one of such joint holders may give effectual
receipts of any dividends, interests or other moneys
payable in respect of such share/debenture.
Delivery of certificate and giving of notices to first
named holder
(f) Only the person whose name stands first in the
Register of Members/debenture holders as one of the
joint holder of any shares/debentures shall be entitled
to the delivery of the certificate relating to such
share/debenture or to receive notice (which
expression shall be deemed to include all documents
as defined in Article (2) (a) hereof and any document
served on or sent to such person shall be deemed
service on all the joint holders.
Vote of joint holders
(g) (i)Any one of two or more joint holders may vote at
any meeting either personally or by attorney or by
proxy in respect of such shares as if he were solely
entitled thereto and if more than one of such joint
holders be present at any meeting personally or by
proxy or by attorney then that one of such persons so
present whose name stands first or higher (as the
case may be) on the Register in respect of such share
shall alone be entitled to vote in respect thereof but
the other or others of the joint holders shall be entitled
to be present at the meeting provided always that a
joint holder present at any meeting personally shall be
entitled to vote in preference to a joint holder present
by Attorney or by proxy although the name of such
joint holder present by an Attorney or proxy although
the name of such joint holder present by an Attorney
or proxy stands first or higher (as the case may be) in
the Register in respect of such shares.
272
(ii) Several executors or administrators of a deceased
member in whose (deceased member) sole name any
share stands shall for the purpose of this clause be
deemed joint holders.
BORROWING POWERS
Restriction on powers of the Board
80
The Board of Directors shall not, except with the
consent of the Company in general meeting and
subject to Article 172 of articles of the Association of
the Company:
(a) sell, lease or otherwise dispose of the whole or
substantially the whole, of the undertaking of the
Company, or where the Company owns more than
one undertaking of the whole, or substantially the
whole, of any such undertaking.
(b) remit, or give time for the repayment of any debt
due by a Director.
(c) invest, otherwise than in trust securities the amount
of compensation received by the Company in respect
of the compulsory acquisition alter the commencement
of this Act, of any such undertaking as is referred to in
clause (a) or of any premises or properties used for
any such undertaking and without which it can not be
carried on or can be carried on only with difficulty or
only after a considerable time.
(d) borrow monies where the moneys to be borrowed,
together with the moneys already borrowed by the
company (apart from temporary loans obtained from
the Company’s bankers in the ordinary course of
business) will exceed the aggregate of the paid-up
capital of the company and its free reserves, that is to
say, reserves not set apart for any specific purpose.
(e) contribute to charitable and other funds not directly
relating to the business of the Company or the welfare
of its employees, any amounts the aggregate of which
will, in any financial year, exceed fifty thousand rupees
or five percent, of its average net profits as determined
in accordance with the provisions of Sections 349 and
350 of the Act during the three financial years
immediately preceding whichever is greater.
273
Explanation : Every resolution passed by the
Company in general meeting in relation to the exercise
of the power referred to in clause (d) or in clause (e)
shall specify the total amount upto which money may
be borrowed by the Board of Directors under clause
(d) or as the case may be, the total amount which may
be contributed to charitable and other funds in any
financial year under clause (e).
Conditions on which money may be
borrowed
81
Bonds, debentures etc. to be subject to
control of Directors
82
Securities may be assignable free from
equities
83
Issue at discount etc. or with special
privileges
84
The Directors may raise and secure the payment of
such sum or sums in such manner and upon such
terms and conditions in all respects as they think fit,
and in particular by the issue of bonds, perpetual or
redeemable, debenture or debenture stocks or any
mortgage or charge or other security on the
undertaking of the whole or any part of the property of
the Company (both present and future) including its
uncalled capital for the time being.
Any bonds, debentures, debenture stocks or other
securities issued or to be issued by the Company shall
be under the control of the Directors who may issue
them upon such terms and conditions and in such
manner and for such consideration as they shall
consider to be for the benefit of the Company.
Provided that bonds, debentures, debenture stock or
other securities so issued or to be issued by the
Company with the right to allotment of or conversion
into shares shall not be issued except with the
sanction of the Company in general meeting by a
special resolution
Debentures, debenture stocks, bonds or other
securities may be made assignable free from any
equities between the company and the person to
whom the same may be issued
Any bonds, debenture stocks, or other securities may
be issued, subject to the provisions of the Act, at a
discount premium or otherwise and with any special
privileges as to redemption, surrender, drawings,
appointment of Directors and otherwise and subject to
the following :
Debentures with voting rights not to be issued
(a) The Company shall not issue any debentures
carrying voting rights at any meeting of the Company
whether generally or in respect of particular classes of
business.
(b) The Company shall have power to reissue
redeemed debentures in certain cases in accordance
274
with Section 121 of the Act.
(c) Payment of certain debts out of assets subject to
floating charge in priority to claims under the charge
may be made in accordance with the provisions of
Section 123 of the Act.
(d) Certain charges mentioned in Section 125 of the
Act shall be void against the liquidators or creditors
unless registered as provided in Section 125 of the
Act.
(e) The term ‘charge’ shall include mortgage in these
Articles.
(f) A contract with the Company to take up and pay for
any debentures of the Company may be enforced by a
decree for specific performance.
Limitation of time for issue of certificate
(g) The Company shall, within three months after the
allotment of any of its debentures or debenture stock,
and within one month after the application for the
registration of the transfer of any such debentures or
debenture stocks have complete and have ready for
delivery the Certificate of all the debentures and the
Certificates of all debenture stocks allotted or
transferred unless the conditions of issue of the
debentures or debenture stocks otherwise provide.
The expression ‘transfer’ for the purpose of this clause
means a transfer dully stamped and otherwise valid
and does not include any transfer which the company
is for any reason entitled to refuse to register and does
not register.
Right to obtain copies of and inspect
Trust Deed
(h)
A copy of any Trust Deed for securing any
issue of debentures shall be forwarded to the holder of
any such debentures or any member of the Company
at his request and within seven days of the making
thereof on payment.
(1) In the case of a printed Trust Deed of the sum of
Rupee One and
(2) In the case of a Trust Deed which has not been
printed of thirty seven paise for every one hundred
words or fractional part thereof required to be copied.
(ii) The Trust Deed referred to in item (i) above shall
275
Mortgage of uncalled capital
85
Indemnity may be given
86
Registration of charges
87
also be open to inspection by any member or
debenture holder of the Company in the same
manner, to the same extent, and on payment of the
same fees, as if it were the Register of Members of
the Company.
If any uncalled capital of the Company is included in or
charged by any mortgage or other security the
Directors shall, subject to the provisions of the Act and
these Articles, make calls on the members in respect
of such uncalled capital in trust for the person in
whose favour such mortgage or security is executed.
If the Directors or any of them or any other person
shall become personally liable for the payment of any
sum primarily due from the Company, the Directors
may execute or cause to be executed any mortgage
charge or security over or affecting the whole or any
part of the assets of the Company by way of indemnity
to secure the Directors or person so becoming liable
as aforesaid from any loss in respect of such liability.
(a) The provisions of the Act relating to registration of
charges shall be complied with.
(b) In the case of a charge created out of India and
comprising solely property situated outside India, the
provisions of Section 125 of the Act shall also be
complied with.
(c) Where a charge is created in India but comprises
property outside India, the instrument creating or
purporting to create the charge under Section 125 of
the Act or a copy thereof verified in the prescribed
manner, may be filed for registration, notwithstanding
that further proceedings may be necessary to make
the charge valid or effectual according to the law of
the country in which the property is situate, as
provided by Section 125 of the Act.
(d) Where any charge on any property of the
Company required to be registered under Section 125
of the Act has been so registered any person
acquiring such property or any part thereof or any
share or interest therein shall be deemed to have
notice of the charge as from the date of such
registration.
(e) In respect of registration of charges on properties
acquired subject to charge, the provisions of Section
127 of the Act shall be complied with.
276
(f) The Company shall comply with the provisions of
Section 128 of the Act relating to particulars in case of
series of debentures entitling holders pari passu.
(g) The Company shall comply with the provisions of
Section 129 of the Act in regard to registration of
particulars of commission, allowance or discount paid
or made, directly or indirectly, in connection with the
debentures.
(h) The provisions of Section 133 of the Act as to
endorsement of Certificate of registration on
debenture or Certificate of debenture stock shall be
complied with by the Company.
(i) The Company shall comply with the provisions of
Section 134 of the Act as regards registration of
particulars of every charge and of every series of
debentures.
(j) As to modification of charges the Company shall
comply with the provisions of Section 135 of the Act.
(k) The Company shall comply with the provisions of
Section 136 of the Act regarding keeping a copy of
instrument creating charge at the registered officer of
the company and comply with the provisions of
Section 137 of the Act in regard to entering in the
register of charges any appointment of Receiver or
Manager as therein provided.
(l) The Company shall also comply with the provisions
of Section 138 of the Act as to reporting satisfaction of
any charge and procedure thereafter.
(m) The Company shall keep at its registered office a
Register of charges and enter therein all charges
specifically affecting any property of the Company and
all floating charges on the undertaking or on any
property of the company giving in each case.
(i) a short description of the property charged.
(ii)
the amount of the charge; and
(iii)
except in the case of securities to bearer, the
names of persons entitled to the charge.
277
(n)
Any creditor or member of the Company and
any other person shall have the right to inspect copies
of instruments creating charges and the Company’s
Register of charges in accordance with and subject to
the provisions of Section 144 of the Act.
Trust not recognised
88
No notice of any trust, express or implied or
constructive, shall be entered on the Register of
Debenture holders.
Powers to issue share warrants
89
Deposit of share warrants
90
The Company may issue share warrants subject to
and in accordance with the provisions of Sections 114
and 115 of the Act and accordingly, the Board may, in
its discretion, with respect to any share which is fully
paid upon application in writing signed by the persons
registered as holder of the share and authenticated by
such evidence (if any) as the Board may, from time to
time require as to the identity of the person signing the
application, and on receiving the certificate (if any) of
the share, and the amount of the stamp duty on the
warrant and such fee as the Board may, from time to
time, require, issue a share warrant.
(a)
The bearer of a share warrant may at any time
deposit the warrant at the office of the Company and
so long as the warrant remains so deposited, the
depositor shall have the same right of signing a
requisition for calling a meeting of the Company, and
of attending, and voting, and exercising the other
privileges of a Member at any meeting held after the
expiry of two clear days from the time of deposit, as if
his name were inserted in the Register of Members as
the holder of the share included in the deposited
warrant.
SHARE WARRANTS
(b) Not more than one person shall be recognised as
depositor of the Share Warrant.
(c) The Company shall on two days’ written notice
return the deposited share warrant to the depositor.
Privileges and disabilities
holders of share warrant
of
the
91
(a) Subject as herein otherwise expressly provided, no
person shall, as bearer of a share warrant, sign a
requisition for calling a meeting of the Company, or
attend, or vote or exercise any of the privileges of a
member at a meeting of the Company, or be entitled
278
to receive any notice from the Company.
Issue of new share warrant or coupon
92
(b) The bearer of a share warrant shall be entitled in
all other respects to the same privileges and
advantages as if he were named in the Register of
members as the holder of the shares included in the
warrant and he shall be a member of the Company.
The Board may, from time to time, make rules as to
the terms on which (if it shall think fit) a new share
warrant or coupon may be issued by way of renewal in
case of defacement, loss or destruction.
CONVERSION OF SHARES INTO STOCK AND RECONVERSION
Shares may be converted into stock
93
Rights of stock holders
94
The Company in general meeting may convert any
paid up shares into stock and when any shares shall
have been converted into stock, the several holders of
such stock may thenceforth transfer their respective
interest therein or any part of such interests, in the
same manner and subject to the same regulations as,
and subject to which shares from which the stock arise
might have been transferred, if no such conversion
had taken place, or as near thereto as circumstances
will admit. The Company may at any time reconvert
any stock into paid up shares of any denomination.
The holders of stock shall, according to the amount of
stock, held by them have the same right, privileges
and advantages as regards dividends, voting at
meeting of the Company and other matters, as if they
held the share from which the stock arose, but no
such privilege or advantage (except participation in the
dividends and profits of the Company and the assets
on winding up) shall be conferred by an amount of
stock which would not if existing in shares, have
conferred that privilege or advantage.
GENERAL MEETINGS
Annual General Meeting
95
Subject to the provisions contained in Sections 166
and 210 of the Act, as far as applicable, the Company
shall in each year hold, in addition to any other
meetings, a general meeting as its annual general
meeting, and shall specify, the meeting as such in the
Notice calling it; and not more than fifteen months
shall elapse between the date of one annual general
meeting of the company and that of the next.
Provided that if the Registrar for any special reason,
279
extends the time within which any annual general
meeting shall be held, then such annual general
meeting may be held within such extended period.
Summary of Annual General Meeting
The Company may in any one general
meeting fix the place for its any annual general
meetings. Every member of the Company shall be
entitled to attend either in person or by proxy and the
Auditor of the Company shall have the right to attend
and to be heard at any general meeting which he
attends on any part of the business which concerns
him as Auditor. At every annual general meeting of the
Company, there shall be laid on the table, the
Director’s report, the audited statements of accounts
and auditor’s report (if any, not already incorporated in
the audited statements of accounts). The proxy
registered with the Company and Register of
Director’s Share holdings of which latter register shall
remain open and accessible during the continuance of
the meeting. The Board shall cause to prepare the
Annual list of members, summary of Share Capital,
Balance Sheet and Profit and Loss Account and
forward the same to the Registrar in accordance with
Sections 159, 161 and 220 of the Act.
Time and place of Annual General
Meeting
96
Sections 171 to 186 of the Act shall
apply to meetings
97
Powers
of
Director’s
to
Extraordinary General meeting
call
98
Calling of Extra Ordinary General
Meeting on requisition
99
Every annual general meeting shall be called at any
time during business hours, on a day that is not a
public holiday, and shall be held either at the
registered office of the Company or at some other
place within the city, town or village in which the
registered office of the Company is situate, and the
notice calling the meeting shall specify it as the annual
general meeting.
Sections 171 to 186 of the Act with such adaptations
and modifications, if any, as may be prescribed shall
apply with respect to meetings of any class of
members or debenture holders of the Company in like
manner as they apply with respect to general
meetings of the Company.
The Directors may call an extraordinary general
meeting of the Company whenever they think fit.
a) The Board of Directors of the Company shall on the
requisition of such number of members of the
Company as is specified in clause (d) of this Article,
280
forthwith proceed duly to call an Extraordinary general
meeting of the Company.
(b) The requisition shall set out the matters for the
consideration of which the meeting is to be called,
shall be signed by the requisitionists, and shall be
deposited at the registered office of the Company.
(c) The requisition may consist of several documents
in the like form, each signed by one or more
requisitionists.
(d) The number of members entitled to requisition a
meeting in regard to any matter shall be such number
of them as hold at the date of the deposit of the
requisition not less than one-tenth of such of the paid
up share capital of the Company as at that date
carried the right of voting in regard to that matter.
(e) Where two or more distinct matters are specified in
the requisition the provisions of clause (d) above, shall
apply separately in regard to each such matter; and
the requisition shall accordingly be valid only in
respect of those matters in regard to which the
condition specified in that clause is fulfilled.
(f) If the Board does not, within twenty one days from
the date of the deposit of a valid requisition in regard
to any matters, proceed duly to call a meeting for the
consideration of those matters then on a day not later
than forty five days from the date of the deposit of the
requisition, the meeting may be called:
(i) by the requisitionists themselves;
(ii) by such of the requisitionists as represent either a
majority in value of the paid up share capital held by
all of them or not less than one tenth of such of the
paid-up share capital of the Company as is referred to
in clause (d) above, whichever is less.
Explanation : For the purpose of this clause, the Board
shall in the case of a meeting at which resolution is to
be proposed as a Special Resolution, be deemed not
to have duly convened the meeting if they do not give
such notice thereof as is required by sub-section 189
of the Act.
(g) A meeting called under clause (f) above, by the
281
requisitionists or any of them:
(i) shall be called in the same manner, as nearly as
possible, as that in which meetings are to be called by
the Board; but
(ii) shall not be held after the expiration of three
months from the date of the deposit of the requisition.
Explanation : Nothing in clause (g) (ii) above, shall be
deemed to prevent a meeting duly commenced before
the expiry of the period of three months aforesaid,
from adjourning to some day after the expiry of that
period.
(h) Where two or more persons hold any shares or
interest in the Company jointly, a requisition, or a
notice calling a meeting, signed by one or some of
them shall, for the purposes of this Article, have the
same force and effect as if it had been signed by all of
them.
(i) Any reasonable expenses incurred by the
requisitionists by reason of the failure of the Board
duly to call a meeting shall be repaid to the
requisitionists by the Company; and any sum so
repaid shall be retained by the Company out of any
sums due to become due from the Company by way
of fees or other remuneration for their services to such
of the Directors as were in default.
Length of notice for calling meeting
100
(a) A general meeting of the Company may be called
by giving not less than twenty one days’ notice in
writing.
(b) A general meeting of the Company may be called
after giving shorter notice than that specified in clause
(a) above, if consent is accorded thereto;
(i) in the case of an annual general meeting by all the
members entitled to vote thereat; and
(ii) in the case of any other meeting, by members of
the Company holding not less than 95 (ninety five) per
cent of such part of the paid up capital of the
Company as gives a right to vote at the meeting;
Provided that where any members of the Company
are entitled to vote only on some resolution or
282
resolutions to be moved at the meeting and not on the
others, those members shall be taken into account for
the purposes of this clause in respect of the former
resolution or resolutions and not in respect of the
latter.
Contents and manner of service of
notice and persons on whom it is to be
served
101
(a)
Every notice of a meeting of the Company
shall specify the place and the day and hour of the
meeting and shall contain a statement of the business
to be transacted thereat.
(b) Notice of every meeting of the Company shall be
given.
(i) to every member of the Company, in any manner
authorised by sub-sections (1) to (4) of Section 53 of
the Act;
(ii) to the persons entitled to a share in consequence
of the death or insolvency of a member, by sending it
through the post in a prepaid letter addressed to them
by name, or by the title or representatives of the
deceased or assignees of the insolvent, or by any like
description, at the address, if any, in India supplied for
the purpose by the persons claiming to be so entitled,
or until such an address has been so supplied, by
giving the notice in any manner in which it might have
been given if the death or insolvency had not
occurred;
(iii) to the Auditor or Auditors for the time being of the
Company in any manner authorised by Section 53 of
the Act in the case of any member or members of the
Company and
(iv) to all the Directors of the Company.
Provided that where the notice of a meeting is given
by advertising the same in a newspaper circulating in
the neighborhood of the registered office of the
Company under sub-section (3) of Section 53 of the
Act, the statement of material facts referred to in
Section 173 of the Act need not be annexed to the
notice as required by that Section but it shall be
mentioned in the advertisement that the statement has
been forwarded to the members of the Company.
(c) The accidental omission to give notice to, or the
non-receipt of notice by any member or other person
283
Explanatory statement to be annexed
to notice
102
to whom it should be given shall not invalidate the
proceedings at the meeting.
(A)
For the purpose of this Article :
(i)
in the case of an annual general meeting, all
business to be transacted at the meeting shall be
deemed special with exception of business relating to:
(a) the consideration of the accounts, balance sheet
and the reports of the Board of Directors and auditors.
(b) the declaration of a dividend;
(c) the appointment of Directors in the place of those
retiring, and
(d) the appoint of and the fixing of the remuneration of
the auditors, and
(ii) in the case of any other meetings, all business
shall be deemed special.
(B) Where any items of business to be transacted at
the meeting are deemed to be special as aforesaid,
there shall be annexed to the notice of the meeting a
statement setting out all material facts concerning
each item of business including in particular the nature
of the concern or interest, if any, therein of every
Director, and the manager, if any.
Provided that where any item of special business as
aforesaid to be transacted at a meeting of the
Company relates, to or affects, any other company,
the extent of shareholding interest in that other
Company of any such person shall be set out in the
circumstances specified in the proviso to sub-section
(2) of Section 173 of the Act.
(C) Where any item of business consists of the
according of approval to any document by the
meeting, the time and place where the documents can
be inspected shall be specified in the statements
aforesaid.
284
Quorum for meeting
103
(a)
Five members personally present shall be the
quorum for a general meeting of the company.
If quorum not present meeting to be dissolved or
adjourned
(b) (i) If within half an hour from the time appointed
for holding a meeting of the Company, a quorum is not
present, the meeting, if called upon by requisition of
members, shall stand dissolved.
(ii)
In any other case, the meeting shall stand
adjourned to the same day in the next week, at the
same time and place or to such other day and at such
other time and place, as the Board may determine.
Presence of quorum
104
Adjourned meeting to transact busines
(c)If at the adjourned meeting also, a quorum is not
present within half an hour from the time appointed for
holding the meeting, the members present shall be the
quorum.
(a) No business shall be transacted at any general
meeting unless the requisite quorum be present at the
commencement of the business.
Business confined to election of chairman whilst chair
is vacant
(b) No business shall be discussed or transacted at
any general meeting except the election of a
Chairman whilst the Chair is vacant.
Chairman of general meeting
(c) (i) The Chairman of the Board of Directors shall
be entitled to take the chair at every General Meeting.
If there be no Chairman or if at any meeting he shall
not be present within 15 (fifteen) minutes after the time
appointed for holding such meeting or is unwilling to
act, the Directors present may choose one of
themselves to be the Chairman and in default of their
doing so, the members present shall choose one of
the Directors to be Chairman and if no Directors
present be willing to take the chair, the members
present shall choose one of themselves to be the
Chairman.
(ii)
If at any meeting a quorum of members shall
be present, and the Chair shall not be taken by the
Chairman or Vice Chairman of the Board or by a
Director at the expiration of 15 (fifteen) minutes from
the time appointed for holding the meeting or if before
285
the expiration of that time all the Directors shall
decline to take the Chair, the members present shall
choose one of their members to be the Chairman of
the meeting.
Chairman with consent may adjourn the meeting
(d) the Chairman with the consent of the meeting may
adjourn any meeting from time to time and from place
to place in the city, town or village where the
registered office of the Company is situate.
Business at adjourned meeting
(e) No business shall be transacted at any adjourned
meeting other than the business which might have
been transacted at the meeting from which the
adjournment took place.
Notice of adjourned meeting
(f) When a meeting is adjourned only for thirty days or
more, notice of the adjourned meeting shall be given
as in the case of original meeting.
Proxies
105
In what cases poll taken with or without adjournment
(g) Any poll duly demanded on the election of a
Chairman of a meeting or any question of adjournment
shall be taken at the meeting forthwith, save as
aforesaid, any business other than that upon which a
poll has been demanded may be proceeded with
pending the taking of the poll.
(a) Any member of the Company entitled to attend and
vote at a meeting of the Company shall be entitled to
appoint any other person (whether a member or not)
as his proxy to attend and vote instead of himself. A
member (and in the case of joint holders all holders)
shall not appoint more than one person as proxy. A
proxy so appointed shall not have any right to speak at
the meeting.
Provided that unless where the proxy is appointed by
a body corporate a proxy shall not be entitled to vote
except on a poll.
(b) In every notice calling a meeting of the Company
there shall appear with reasonable prominence a
statement that a member entitled to attend and vote is
entitled to appoint a proxy to attend and vote instead
of himself, and that a proxy need not be a member.
(c) or otherwise relating to the appointment of a proxy
286
shall be lodged with the Company not less than 48
(fourty eight) hours before the meeting in order that
the appointment may be effective thereat.
(d) The instrument appointing a proxy shall :
(i)
be in writing and
(ii)
be signed by the appointer or his attorney duly
authorised in writing or, if the appointer is a body
corporate, be under its seal or be signed by an officer
or an attorney duly authorised by it.
(e) Every instrument of proxy whether for a specified
meeting or otherwise shall, as nearly as
circumstances will admit, be in usual common form.
Form of Proxy
(f) An instrument appointing a proxy, if in any of the
forms set out in Schedule IX to the Act shall not be
questioned on the ground that it fails to comply with
any special requirements specified for such instrument
by these Articles.
(g) Every member entitled to vote at a meeting of the
Company, or on any resolution to be moved thereat,
shall be entitled during the period beginning 24
(twenty four) hours before the time fixed for the
commencement of the meeting and ending with
conclusion of the meeting, to inspect the proxies
lodged at any time during the business hours of the
Company, provided not less than 3 (three) days’
notice in writing of the intention so to inspect is given
to the Company.
VOTES OF MEMBERS
Restriction on exercise of voting rights
of members who have not paid calls
106
(a) No member shall exercise any voting right in
respect of any shares registered in his name on which
any calls or other sums presently payable by him have
not been paid or in regard to which the Company has
and has exercised any right of lien.
(b) Where the shares of the Company are held in trust,
the voting power in respect of such shares shall be
regulated by the provisions of Section 187B of the Act.
Restriction on exercise of voting right
in other cases to be void
107
A member is not prohibited from exercising his voting
right on the ground that he has not held his share or
other interest in the Company for any specified period
287
Equal rights of share holders
108
Voting to be by show of hands in first
instance
109
No voting by proxy on show of hands
How members non-compos, minutes
and minor may vote
Votes in respect of shares of deceased
or insolvent members etc.
preceding the date on which the vote is taken, or on
any other ground not being a ground set out in Article
104.
Any shareholder whose name is entered in the
Register of Members of the Company shall enjoy the
same rights and be subject to the same liabilities as all
other shareholders of the same class.
At any general meeting a resolution put to vote at the
meeting shall unless a poll is demanded under Section
179 of the Act be decided on a show of hands.
(a) Subject to the provisions of the Act, upon show of
hands every member entitled to vote and present in
person shall have one vote, and upon a poll every
member entitled to vote and present in person or by
proxy shall have one vote, for every share held by
him.
(b) No member not personally present shall be
entitled to vote on a show of hands unless such
member is a body corporate present by proxy or by a
representative duly authorised under Sections 187 or
187A of the Act, in which case such proxy or
representative may vote on a show of hands as if he
were a member of the Company.
(c) A member of unsound mind or in respect of whom
an order has been made by any Court having
jurisdiction in lunacy, may vote, whether on a show of
hands or on a poll by his committee or other legal
guardian and any such committee or guardian may on
poll vote by proxy; if any member be a minor the vote
in respect of his share or shares shall be by his
guardians or any one of his guardians, if more than
one, to be selected in case of dispute by the Chairman
of the meeting.
(d) Subject to the provisions of the Act and other
provisions of these Articles, any person entitled under
the transmission clause to any shares may vote at any
general meeting in respect thereof as if he was the
registered holder of such shares, provided that at least
48 (forty eight) hours before the time of holding the
meeting or adjourned meeting as the case may be at
which he proposes to vote, he shall satisfy the
Directors of his right to such shares unless the
Directors shall have previously admitted his right to
vote at such meeting in respect thereof.
(e)If any such instrument of appointment be confined
288
to the object of appointing proxy or substitute for
voting at meetings of the Company, it shall remain
permanently or for such time as the Directors may
determine in the custody of the Company; if
embracing other objects a copy thereof examined with
the original, shall be delivered to the Company to
remain in the custody of the Company.
Custody of Instrument
Validity of votes given by proxy
notwithstanding death of members etc.
(f)A vote given in accordance with the terms of an
instrument of proxy shall be valid notwithstanding the
previous death of the principal or revocation of the
proxy or the transfer of the share in respect of which
the vote is given, provided that no intimation in writing
of the death, revocation or transfer shall have been
received at the registered office of the Company
before the meeting.
Time for objections for vote
(g)No objection shall be made to the validity of any
vote except at the meeting or poll at which such vote
shall be tendered and every vote whether given
personally or by an agent or proxy or representative
not disallowed at such meeting or poll shall be
deemed valid for all purpose of such meeting of poll
whatsoever
Chairman of any meeting to be the
judge of any vote
Chairman’s declaration of result of
voting by show of hands to be
conclusive
110
Demand for poll
111
(h)The Chairman of any meeting shall be the sole
judge of the validity of every vote tendered at such
meeting. The Chairman present at the taking of a poll
shall be the sole judge of the validity of every vote
tendered at such poll.
A declaration by the Chairman in pursuance of Section
177 of the Act that on a show of hands, a resolution
has or has not been carried, either unanimously or by
a particular majority, and an entry to that effect in the
books containing the minutes of the proceedings of
the Company, shall be conclusive evidence of the fact,
without proof of the number or proportion of the votes
cast in favour of or against such resolution.
(a) Before or on the declaration of the result of the
voting on any resolution of a show of hands, a poll
may be ordered to be taken by the Chairman of the
meeting of his own motion and shall be ordered to be
taken by him on a demand made in that behalf by any
member or members present in person or by proxy
and holding shares in the Company which confer a
power to vote on the resolution not being less than
one-tenth of the total voting power in respect of the
resolution or on which an aggregate sum of not less
than fifty thousand rupees has been paid up.
289
Time of taking poll
112
(b) The demand for a poll may be withdrawn at any
time by the person or persons who made the demand
(a) A poll demanded on a question of adjournment
shall be taken forthwith.
(b) A poll demanded on any other question (not being
a question relating to the election of a Chairman which
is provided for in Section 175 of the Act) shall be taken
at such time not being later than 48 (fourty eight)
hours from the time when the demand was made, as
the Chairman may direct.
Right of a member to use his votes
differently
113
Scrutinizers at poll
114
On a poll taken at a meeting of the Company a
member or other person entitled to vote for him as the
case may be, need not, if he votes, use, all his votes
or cast in the same way all the votes he uses.
(a) Where a poll is to be taken, the Chairman of the
meeting shall appoint two scrutinizers to scrutinise the
votes given on the poll and to report thereon to him.
(b) The Chairman shall have power, at any time before
the result of the poll is declared, to remove a
scrutinizer from office and to fill vacancies in the office
of scrutinizer arising from such removal or from any
other cause.
Manner of taking poll and result thereof
115
Casting Vote
116
Representation of Body Corporate
117
(c) Of the two scrutinizers appointed under this Article,
one shall always be a member (not being an officer or
employee of the Company) present at the meeting,
provided such a member is available and willing to be
appointed.
(a) Subject to the provisions of the Act, the Chairman
of the meeting shall have power to regulate the
manner in which a poll shall be taken.
(b) The result of the poll shall be deemed to be the
decision of the meeting on the resolution on which the
poll was taken.
In the case of an equality of votes, whether on a show
of hands or on a poll, the Chairman of the meeting at
which the show of hands takes place or at which the
polls is demanded shall be entitled to a casting vote in
addition to his own vote or votes to which he may be
entitled as a member.
A body corporate (whether a Company within the
meaning of the Act or not) if it is a member or creditor
(including a holder of debentures) of the Company
may in accordance with the provisions of Section 187
290
Representation of the President of
India or Governors
118
of the Act authorise such person by a resolutin of its
Board of Directors as it thinks fit, to act as its
representative at any meeting of the Company or of
any class of members of the Company or at any
meeting of creditors of the Company
(a) The President of India or the Governor of a State if
he is a member of the Company may appoint such
person as he thinks fit to act as his representative at
any meeting of the Company or at any meeting of any
class of members of the Company in accordance with
provisions of Section 187A of the Act or any other
statutory provision governing the same.
(b) A person appointed to act as aforesaid shall for the
purposes of the Act be deemed to be a member of
such a Company and shall be entitled to exercise the
same rights and powers (including the right to vote by
proxy) as the President or as the case may be the
Governor could exercise, as a member of the
Company.
Public Trustee
Circulation of member’s resolution
119
Resolution requiring special notice
120
Resolutions
meeting
121
Registration
agreements
passed
of
at
adjourned
resolutions
and
122
Minutes of proceedings of general
meeting and of Board and other
meetings
123
(c)The Company shall observe the provisions of
Section 187B of the Act, in regard to the Public
Trustee.
The Company shall comply with provisions of Section
188 of the Act, relating to circulation of member’s
resolutions
The Company shall comply with provisions of Section
190 of the Act relating to resolution requiring special
notice.
The provisions of Section 191 of the Act shall apply to
resolutions passed at an adjourned meeting of the
Company, or of the holders of any class of shares in
the Company and of the Board of Directors of the
Company and the resolutions shall be deemed for all
purposes as having been passed on the date on which
in fact they were passed and shall not be deemed to
have been passed on any earlier date.
The Company shall comply the provisions of Section
192 of the Act relating to registration of certain
resolutions and agreements.
(a) The Company shall cause minutes of all
proceedings of general meetings, and of all
proceedings of every meeting of its Board of Directors
or of every Committee of the Board to be kept by
making within thirty days of the conclusion of every
such meeting concerned, entries thereof in books kept
291
for that purpose with their pages consecutively
numbered.
(b) Each page of every such book shall be initialed or
signed and the last page of the record of proceedings
of each meeting in such books shall be dated and
signed:
(i) in the case of minutes of proceedings of the Board
or of a Committee thereof by the Chairman of the said
meeting or the Chairman of the next succeeding
meeting.
(ii) in the case of minutes of proceedings of the
general meeting by Chairman of the said meeting
within the aforesaid period, of thirty days or in the
event of the death or inability of that Chairman within
that period, by a Director duly authorised by the Board
for the purpose.
(c) In no case the minutes of proceedings of a meeting
shall be attached to any such book as aforesaid by
pasting or otherwise.
(d) The minutes of each meeting shall contain a fair
and correct summary of the proceedings thereat.
(e) All appointment of officers made at any of the
meetings aforesaid shall be included in the minutes of
the meeting
(f) In the case of a meeting of the Board of Directors or
of a Committee of the Board, the minutes shall also
contain:
(i) the names of the Directors present at the meetings,
and
(ii) in the case of each resolution passed at the
meeting, the names of the Directors, if any, dissenting
from or not concurring in the resolution.
(g) Nothing contained in Clauses (a) to (d) hereof shall
be deemed to require the inclusion in any such
minutes of any matter which in the opinion of the
Chairman of the meeting :
(i) is or could reasonably be regarded, as defamatory
of any person
(ii) is irrelevant or immaterial to the proceedings; or
292
(iii) is detrimental to the interests of the Company.
The Chairman shall exercise an absolute discretion in
regard to the inclusion or no-inclusion of any matter in
the minutes on the grounds specified in this clause.
Minutes to be considered to be evidence
Presumptions to be drawn where
minutes duly drawn and signed
124
Inspection of Minute Books of General
Meetings
125
(h) The minutes of meetings kept in accordance with
the provisions of Section 193 of the Act shall be
evidence of the proceedings recorded therein.
Where minutes of the proceedings of any general
meeting of the Company or of any meeting of its
Board of Directors or of a Committee of the Board
have been kept in accordance with the provisions of
Section 193 of the Act then until the contrary is
proved, the meeting shall be deemed to have been
duly called and held, and all proceedings thereat to
have duly taken place and in particular all
appointments of Directors or Liquidators made at the
meeting shall be deemed to be valid and the minutes
shall be evidence of the proceedings recorded therein.
(a) The books containing the minutes of the
proceedings of any general meeting of the Company
shall;
(i) be kept at the registered office of the Company, and
(ii) be open, during the business hours to the
inspection of any member without charge subject such
reasonable restrictions as the Company may, in
general meeting impose so however that not less than
two hours in each day are allowed for inspection.
(b) Any member shall be entitled to be furnished,
within seven days after he has made a request in that
behalf of the Company, with a copy of any minutes
referred to in Clause (a) above, on payment of thirty
seven paise for every one hundred words or fractional
part thereof required to be copied.
Publication of reports of proceeding of
general meetings
126
No document purporting to be a report of the
proceedings of any general meeting of the Company
shall be circulated or advertised at the expenses of the
Company unless it includes the matters required by
Section 193 of the Act to be contained in the Minutes
of the proceedings of such meeting.
293
MANAGERIAL PERSONNEL
Managerial Personnel
127
The Company shall duly observe the provisions of
Section 197A of the Act regarding prohibition of
simultaneous appointment of different categories of
managerial personnel therein referred to.
Board of Directors
128
Appointment of Senior Executive as
Wholetime Directors
129
The First Directors of the Company are the following
persons :
1. SHRIKANT JESINGBHAI PARIKH
2. JESINGBHAI BADARMAL PARIKH
3. ARPITA SHRIKANT PARIKH
(a) Subject to the provisions of the Act and within the
overall limit prescribed under these Articles for the
number of Directors on the Board, the Board may
appoint any Senior Executive of the Company as a
Wholetime Director of the Company for such period
and upon such terms and conditions as the Board may
decide. The Senior Executive so appointed shall be
governed by the following provisions:
Board of Directors
(i) He shall be liable to retire by rotation as provided in
the Act but shall be eligible for reappointment. His
reappointment as a Director shall not constitute a
break in his appointment as Wholetime Director.
(ii) He shall be reckoned as Director for the purpose of
determining and fixing the number of Directors to retire
by rotation.
(iii) He shall cease to be a Director of the Company on
the happening of any event specified in Sections 283
and 314(2C) of the Act. He shall cease to be a
Director of the Company, if for any reason
whatsoever, he ceases to hold the position of Senior
Executive in the Company or ceases to be in the
employment of the Company.
(iv)Subject to what is stated hereinabove he shall
carry out and perform all such duties and
responsibilities as may, from time to time, be
conferred upon or entrusted to him by the Managing
Director/s and/or the Board, shall exercise such
powers and authorities subject to such restrictions and
conditions and/or stipulations as the Managing
Director/s and/or the Board may, from time to time
determine.
294
Debenture Director
130
Nominee Director
131
(b) Nothing contained in this Article shall be deemed
to restrict or prevent the right of the Board to revoke,
withdraw, alter, vary or modify all or any of such
powers, authorities, duties and responsibilities
conferred upon or vested in or entrusted to such
Wholetime Directors.
Any Trust Deed for securing debentures or debenture
stocks, may, if so arranged, provide for the
appointment, from time to time by the Trustees thereof
or by the holders of debentures or debenture stocks,
of some person or persons to be a Director or
Directors of the Company and may empower such
Trustees or holders of debentures or debenture stocks
from time to time, to remove and reappoint any
Director/s so appointed. The Director/s so appointed
under this Article is herein referred to as “Debenture
Director” and the term “Debenture Director” means the
Director for the time being in office under this Article.
The Debenture Director(s) shall not be bound to hold
any qualification shares and shall not be liable to retire
by rotation or be removed by the Company. The Trust
Deed may contain such ancillary provisions as may be
arranged between the Company and the Trustees and
all such provisions shall have effect notwithstanding
any of the other provisions herein contained.
Notwithstanding anything to the contrary contained in
these Articles, so long as any moneys remain owing
by the Company to the Industrial Development Bank
of India (IDBI), The Industrial Credit and Investment
Corporation of India Ltd. (ICICI), Industrial Finance
Corporation of India (IFCI) and Life Insurance
Corporation of India (LIC) or to any other Finance
Corporation or Credit Corporation or to any other
Finance Company or Body out of any loans granted by
them to the Company or so long as IDBI, IFCI, ICICI,
LIC and Unit Trust of India (UTI) or any other
Financing Corporation or Credit Corporation or any
other Financing Company or Body (each of which
IDBI, IFCI, ICICI, LIC and UTI or any other Finance
Corporation or Credit Corporation or any other
Financing Company or Body is hereinafter in this
Article referred to as “the Corporation”) continue to
hold debentures in the Company as a result of
underwriting or by direct subscription or private
placement, or so long as the Corporation holds shares
in the Company as a result of underwriting or direct
subscription or so long as any liability of the Company
arising out of any guarantee furnished by the
Corporation on behalf of the Company remains
295
outstanding, the Corporation shall have a right to
appoint from time to time any person or persons as a
Director or Directors whole time or non-whole time
(which Director or Directors is/are hereinafter referred
to as “Nominee Director/s”) on the Board of the
Company and to remove from such office any person
or persons so appointed and to appoint any person or
persons in his or their place/s.
The Board of Directors of the Company shall have no
power to remove from office the Nominee Director/s.
At the option of the Corporation such Nominee
Director/s shall not be required to hold any share
qualification in the Company. Also at the option of the
Corporation such Nominee Director/s shall not be
liable to retirement by rotation of Directors. Subject as
aforesaid, the Nominee Director/s shall be entitled to
the same rights and privileges and be subject to the
same obligations as any other Director of the
Company.
The Nominee Director/s so appointed shall hold the
said office only so long as any money remain owing by
the Company to the Corporation or so long as the
Corporation holds debentures in the Company as a
result of direct subscription or private placement or so
long as the Corporation holds shares in the Company
as a result of underwriting or direct subscription or the
liability of the Company arising out of any guarantee is
outstanding and the Nominee Director/s so appointed
in exercise of the said power shall ipso facto vacate
such office immediately the moneys owing by the
Company to the Corporation is paid off or on the
Corporation ceasing to hold debentures/shares in the
Company or on the satisfaction of the liability of the
Company arising out of any guarantee furnished by
the Corporation.
The Nominee Director/s appointed under this Article
shall be entitled to receive all notices of and attend all
General Meetings, Board Meetings and of the
Meetings of the Committee of which the Nominee
Director’s is/are member/s as also the minutes of such
meetings. The Corporation shall also be entitled to
receive all such notices and minutes. The Company
shall pay to the Nominee Director/s sitting fees and
expenses which the other Directors of the Company
are entitled but if any other fees, commission, monies
or remuneration in any form is payable to the Directors
296
of the Company, the fees, commission, monies and
remuneration in relation to such Nominee Director/s
shall accrue to the Corporation and same shall
accordingly be paid by the Company directly to the
Corporation. Any expenses that may be incurred by
the Corporation or by such Nominee Director/s in
connection with their appointment or Directorship,
shall also be paid or reimbursed by the Company to
the Corporation or as the case may be to such
Nominee Director/s.
Provided that if any such Nominee Director/s is an
officer of the Corporation the sitting fee in relation to
such Nominee Director/s shall also accrue to the
Corporation and the same shall accordingly be paid by
the Company directly to the Corporation.
Provided further that if such Nominee Director/s is an
officer of the Reserve Bank of India the sitting fees in
relation to such Nominee Director/s shall also accrue
to IDBI and the same shall accordingly be paid by the
Company directly to IDBI.
Special Director
132
Provided also that in the event of the Nominee
Director/s being appointed as Wholetime Director/s
such Nominee Director/s shall exercise such powers
and duties as may be approved by the Lenders and
have such rights as are usually exercised or available
to a Wholetime Director in the management of the
affairs of the Borrower. Such Nominee Director/s shall
be entitled to receive such remuneration, fees,
commission and monies as may be approved by the
Lenders.
(a) In connection with any collaboration arrangement
with any company or corporation or firm or person for
supply of technical know-how and/or machinery or
technical advice, the Directors may authorise such
Company, Corporation, firm or person (hereinafter in
this clause referred to as “Collaborator”) to appoint
from time to time any person or persons as Director or
Directors of the Company (hereinafter referred to as
“Special Director”) and may agree that such Special
Director shall not be liable to retire by rotation and
need not possess any qualification share to qualify
him for the office of such Director, so however, that
such Special Director shall hold office so long as such
collaboration arrangement remains in force unless
otherwise agreed upon between the Company and
such Collaborator under collaboration arrangements
297
or at any time thereafter.
(b) The collaborator may at any time and from time to
time remove any such Special Director appointed by it
and may at the time of such removal and also in the
case of death or resignation of the person so
appointed, at any time, appoint any other person as a
Special Director in his place and such appointment or
removal shall be made in writing signed by such
company or corporation or any partner or such person
and shall be delivered to the Company at its registered
office.
133
Appointment of Alternate Director
134
(c) It is clarified that every collaborator entitled to
appoint a Director under this Article may appoint one
or more such person or persons as Director(s) and so
that if more than one Collaborator is so entitled there
may at any time be as many Special Directors as the
Collaborators eligible to make the appointment.
Subject to the provisions of Section 255 of the Act, the
number of Directors appointed under Articles 130 and
131 shall not exceed in the aggregate one-third of the
total number of Directors for the time being in office.
(a) The Board of Directors of the Company may
appoint an Alternate Director to act for a Director
(hereinafter in this Article called “the Original Director”)
during his absence for a period of not less than three
months from the State in which meetings of the Board
are ordinarily held.
(b) An Alternate Director appointed under this Article
shall not hold office as such for a period longer than
that permissible to the Original Director in whose place
he has been appointed and shall vacate office if and
when the Original Director returns to the State in
which meeting of the Board are ordinarily held.
Appointment of Additional Directors
135
(c)If the term of office of the Original Director is
determined before he returns to the State aforesaid
any provision for the automatic reappointment of
retiring Directors in default of another appointment
shall apply to the original and not to the Alternate
Director.
Subject to the provisions of Section 260 of the Act, the
Board of Directors shall have power at any time to
appoint any person as an additional Director to the
Board, but so that the total number of Directors shall
not exceed the maximum number fixed by these
Articles. Any Director so appointed shall hold the office
298
Appointment of Director to fill the
casual vacancy
Individual Resolution
appointment
for
Appointment of chairman
136
Directors’
137
only upto the next annual general meeting of the
Company and shall then be eligible for reappointment.
(a)
Subject to the provisions of Section 262 of the
Act, if the office of any Director appointed by the
Company in general meeting is vacated before his
term of office expires in the normal course, the
resulting casual vacancy may in default of and subject
to any regulation in the Articles of the Company be
filled by the Board of Directors at the meeting of the
Board and the Director so appointed shall hold office
only upto the date upto which the Director in whose
place he is appointed would have held office if it had
not been vacated as aforesaid but he shall then be
eligible for re-election.
(b)At a general meeting of the Company a motion
shall not be made for the appointment of two or more
persons as Director of the Company by a single
resolution unless a resolution that it shall be so made
has first been agreed to by the meeting without any
vote being given against it. Resolution moved in
contravention of this Article shall be void whether or
not objection was taken at the time of its being so
moved. Provided that where a resolution so moved is
passed no provision for the automatic reappointment
of retiring Director by virtue of these Articles and the
Act in default of another appointment shall apply.
The directors may from time to time elect among
themselves a chairman of the Board and determine
the period for which he is to hold office if at any
meeting of the Board, the chairman is not present
within fifteen minutes after the time appointed for
holding the same, the directors present may choose
one of their members to be chairman of the meeting.
Qualification of Director
Qualification of Director
138
Remuneration of Directors
139
A Director need not hold any shares in the Company
to qualify him for the office of a Director of the
Company.
(a) Subject to the provisions of the Act, a Managing
Director or a Director who is in the whole time
employment of the Company may be paid
remuneration either by way of a monthly payment or at
a specified percentage of the net profits of the
Company or partly by one way and partly by the other.
(b) Subject to the provisions of the Act, a Director, who
is neither in the whole time employment nor a
299
Managing Director may be paid remuneration either :
(i) by way of monthly, quarterly or annual payment
with the approval of the Central Government, or
(ii) by way of commission if the Company by a special
resolution has authorised such payment.
Traveling and other expenses
140
Remuneration for extra services
141
Increase in remuneration of Directors
142
Increase in remuneration of Managing
Director
on
re-appointment
or
(c) the fee payable to Directors (other than Managing
or Wholetime Director, if any) for attending each
meeting of the Board or Committee thereof shall be
such sum as may be prescribed by the Act or the
Central Government from time to time.
The Board may allow and pay to any Director for the
purpose of attending a meeting such sum either as
fixed allowance and/or actual as the Board may
consider fair compensation for traveling, board and
lodging and incidental and/or such actual out of pocket
expenses incurred by such Director in addition to his
fees, for attending such meeting to and from the place
at which the meetings of the Board or Committees
thereof or general meetings of the Company are held
from time to time or any other place at which the
Director executes his duties.
If any Director, being willing shall be called upon to
perform extra services or to take any special exertions
for any of the purposes of the Company and in that
event the Company may, subject to provision of the
Act, remunerate such Director either by a fixed sum or
by a percentage of profit or otherwise, as may be
determined by the Directors but not exceeding that
permitted under Section 309 of the Act and such
remuneration may be either in addition to or in
substitution for his share in the remuneration above
provided.
Any provisions relating to the remuneration of any
Director including a Managing or Joint Managing or
Wholetime Director or any amendment thereof, which
purports to increase or has the effect of increasing,
whether directly or indirectly, the amount thereof,
whether that provision is contained in the Company’s
Memorandum or its Articles, or in an agreement
entered into by it or any resolution, passed by the
Company in general meeting or by the Board of
Directors, shall require 310, 311 Schedule XIII and
other applicable provisions of the Companies Act,
1956, and their amendment from time to time.
(b)If the terms of any re-appointment of a Managing or
Joint Managing or Wholetime Director, purport to
300
appointment
Directors not to act when number falls
below minimum
143
Eligibility
144
Directors vacating office
145
increase or have the effect of increasing, whether
directly or indirectly, the remuneration which the
Managing or Joint Managing or Wholetime Director, as
the case may be was receiving immediately before
such reappointment or appointment shall require the
approval of the Central Government unless they are in
accordance with Sections 198, 269, 309, 311
Schedule XIII and other applicable provisions of the
Companies Act, 1956, and their amendment from time
to time.
When the number of Directors in Office falls below the
minimum above fixed, the Directors, shall not act
except in emergencies or for the purpose of filling up
vacancies or for summoning a general meeting of the
Company and so long as the number is below the
minimum they may so act notwithstanding the
absence of the necessary quorum.
A person shall not be capable of being appointed a
Director if he has the disqualifications referred to in
Section 274 of the Act.
(a)
The Office of a Director shall become vacant
if;
(i)
he is found to be of unsound mind by a Court
of competent jurisdiction;
(ii)
he applied to be adjudicated an insolvent;
(iii)
he is adjudged an insolvent;
(iv)
he is convicted by a Court, of ay offence
involving moral turpitude and sentenced in respect
thereof the imprisonment for not less than six months;
(v)
he fails to pay any call in respect of shares of
the Company held by him, whether alone or jointly
with others, within six months from the last date fixed
for the payment of the call unless the Central
Government by Notification in the Official Gazette
removes the disqualification incurred by such failure;
(vi)
he absents himself from three consecutive
meetings of the Board of Directors, or from all
meetings of the Board of Directors for a continuous
period of three months, whichever is longer, without
obtaining leave of absence from the Board;
(vii)
he, whether by himself or by any person for
his benefit or on his account or any firm in which he is
a partner or any private company of which he is a
301
Director, accepts a loan or any guarantee or security
for a loan, from the Company in contravention of
Section 295 of the Act;
(viii)
Act;
he acts in contravention of Section 299 of the
(ix)
he becomes disqualified by an order of Court
under Section 203 of the Act;
(x)
he is removed in pursuance of Section 284 of
the Act;
(xi)
having been appointed a Director by virtue of
his holding any office or other employment in the
Company, he ceases to hold such office or other
employment in the Company;
(xii)
he resigns his office by notice in writing given
to the Company.
(b) Notwithstanding anything in sub-clauses (iii), (iv)
and (v) of clause (a) above, the disqualifications
referred to in these sub-clauses shall not take effect;
(i) for thirty days from the date of the adjudication,
sentence or order;
(ii)where any appeal or petition is preferred within the
thirty days aforesaid against the adjudication,
sentence or conviction resulting in the sentence or
order until the expiry of seven days from the date on
which such appeal or petition is disposed off, or
Removal of Directors
146
(iii) where within the seven days aforesaid, any further
appeal, or petition is preferred in respect of the
adjudication, sentence, conviction or order and the
appeal or petition, if allowed, would result in the
removal of the disqualification, until such further
appeal or petition is disposed off.
(a) The Company may subject to the provisions of
Section 284 and other applicable provisions of the Act
and these Articles) remove any Director other than exofficio Directors or special Directors or debenture
Directors or a nominee Director or a Director
appointed by the Central Government in pursuance of
Section 408 of the Act, before the expiry of his period
of office.
(b) Special notice as provided by Section 190 of the
302
Act shall be required of any resolution to remove a
Director under this Article or to appoint some other
person in place of a Director so removed at the
meeting at which he is removed.
(c) On receipt of notice of a resolution to remove a
Director under this Article, the Company shall forthwith
send a copy thereof to the Director concerned and the
Director (whether or not he is a member of the
Company) shall be entitled to be heard on the
resolution at the meeting.
(d) Where notice is given of a resolution to remove a
Director under this Article and the Director concerned
makes with respect thereto representations in writing
to the Company not exceeding a reasonable length)
and requests their notification to members of the
Company,
the
Company
shall
unless
the
representations are received by it too late for it do so,
(i) in the notice of the resolution given to members of
the Company states the fact of the representations
having been made, and
(ii)send a copy of the representation to every member
of the Company to whom notice of the meeting is sent
(whether before or after receipt of the representations
by the Company) and if a copy of the representations,
is not sent as aforesaid because they were received
too late or because of the Company’s default, the
Director may (without prejudice to his right to be heard
orally) require that the representations be read out at
the meeting provided that copies of the
representations need not be sent or read out at the
meeting if so directed by the Court.
(e) A vacancy created by the removal of a Director
under this Article may, if he had been appointed in
pursuance of Section 262 of the Act be filled by the
appointment of another Director in his stead by the
meeting at which he is removed, provided special
notice of the intended appointment has been given
under clause (b) hereof. A Director so appointed shall
hold office until the date upto which his predecessor
would have held office if he had not been removed as
aforesaid.
(f) If the vacancy is not filled under clause (e), it may
be filled as a casual vacancy in accordance with the
303
provisions, in so far as they may be applicable, of
Section 262 of the Act, and all the provisions of that
Section shall apply accordingly;
Provided that the Director who was removed from
office under this Article shall not be re-appointed as a
Director by the Board of Directors.
(g) Nothing contained in this Article shall be taken;
(i) as depriving a person removed thereunder of any
compensation or damages payable to him in respect
of the termination of his appointment as Director or of
any appointment terminating with that as Director; or
Directors may contract with Company
147
(ii) as derogating from any power to remove a Director
which may exist apart from this Article.
(a) Subject to the restrictions imposed by these
Articles and by Sections 292, 293, 294, 295, 297, 300,
311, 370 and 373 and any other provisions of the Act,
no Director, Managing Director, or other Officer or
employee of the Company shall be disqualified from
holding his office by contracting with the Company
either as vendor, purchaser, agent, broker or
otherwise, nor shall any such contract or arrangement
entered into by or on behalf of the Company in which
any Director, Managing Director, Joint Managing
Director, Executive Director, other officer or employee
shall be in any way interested, be avoided, nor shall
the Director, Managing Director or any officer or
employee so contracting or being so interested be
liable to account to the Company for any profit realised
by any such contract or arrangement by reason only of
such Director, Managing Director, Officer or employee
holding that office or of the fiduciary relation thereby
established, but the nature of his or their interest must
be disclosed by him or them in accordance with the
provisions of Section 299 of the Act where that section
be applicable.
(b) In accordance with Section 300 of the Act, no
Director shall, as a Director, vote or take part in any
discussion in respect of any contract or arrangement
in which he is interested and if he does so vote, his
vote shall be void nor shall his presence count for the
purpose of forming the quorum at the time of any such
discussion or vote.
Provided that above prohibition or restriction shall not
304
apply to the extent or under the circumstances
mentioned in sub-section (2) of Section 300 of the Act.
Directors may be Directors of
companies promoted by the company
148
Duty of Directors
disclosure
149
etc.
to
make
(c) A General notice such as is referred to in subsection (3) of Section 299 of the Act shall be sufficient
disclosure under this Article as provided in that
Section.
A Director, Managing Director, Officer or employee of
the Company may be, or become a Director, of any
Company promoted by the Company or in which it
may be interested as a vendor, member or otherwise,
and no such Director shall be accountable for any
benefits received as Director or member of such
company except to the extent and under the
circumstances as may be provided in the Act.
(a) Every Director (including a person deemed to be a
Director by virtue of the explanation to sub-section (1)
of Section 303 of the Act), Managing Director,
Manager or Secretary of the Company, who is
appointed to or relinquishes the office of Director,
Managing Director, Manager or Secretary of any other
body corporate shall, within twenty days of his
appointment or relinquishment of such office, as the
case may be, disclose to the Company aforesaid the
particulars relating to the office in the other body
corporate which are required to be specified under
sub-section (1) of Section 303 of the Act.
(b) Every Director of the Company and every person
deemed to be a Director of the Company by virtue of
sub-section (10) of Section 307 of the Act and every
other person referred to in sub-section (11) of Section
307 of the Act, shall give notice to the Company of
such matters as may be necessary for the purpose of
enabling the Company to comply with the provisions of
that Section and Section 308 of the Act.
Directors etc. not to hold office or place
of profit
150
Loans to Director
151
Appointment of Sole Selling Agents
152
The provisions of Section 314 of the Act shall be
complied with when applicable in regard to holding of
office or place of profit under the Company or under
any subsidiary of the Company by any person
mentioned in the said section. The words office or
place of profit shall have the meaning assigned to
them by Section 314 of the Act.
The Company shall observe the restrictions imposed on
the Company in regard to granting of loans to Directors
and other persons as provided in Section 295 and other
applicable provisions, if any of the Act.
(a) The appointment, re-appointment and extension of
305
the term of a Sole Selling Agent, shall be regulated in
accordance with the provision of Section 294 of the
Act and any rules or Notifications issued by competent
authority in accordance with that section and the
Directors and/or the Company in general meeting may
make the appointment, re-appointment or extension of
the term of office in accordance with and subject to the
provisions of the said Section and such Rules or
Notification, if any, as may be applicable.
Board resolution at a meeting
necessary for certain contract
153
(b) The payment of any compensation to a Sole
Selling Agent shall be subject to the provisions under
Section 294 A of the Act.
(a) Except with the consent of the Board of Directors
of the Company and with the previous approval of the
Central Government a Director of the Company or his
relative, a firm in which such a Director or relative is a
partner, any other partner in such a firm, or a private
company of which the Director is a member or
Director, shall not enter into any contract with the
Company;
(i) for the sale, purchase or supply of any goods,
materials or services, or
(ii) for underwriting the subscription of any shares in,
or debentures of the Company;
(b) Nothing contained in the foregoing sub-clause (a)
shall affect:
(i) the purchase of goods and materials from the
Company or the sale of goods and materials to the
Company, by any Director, relative, firm, partner or
private company as aforesaid for cash at prevailing
market prices; or
(ii) any contract or contracts between the Company on
one side and any such Director, relative, firm, partner
or private company on the other side of sale,
purchase, or supply of any goods, materials and
services in which either the Company or the Directors,
relative firm, partner or private company as the case
may be, regularly trades or does business;
Provided that such contract or contracts do not relate
to goods and materials the value of which, or service
cost of which, exceeds five thousand rupees in the
aggregate in any year comprised in the period of the
306
contract or contracts.
(c) Notwithstanding anything contained in the
foregoing sub-clause (a) and (b) a Director, relative,
firm, partner of private company as aforesaid, may in
circumstances of urgent necessity, enter, without
obtaining the consent of the Board, into any contract
with the Company for the sale, purchase or supply of
any goods, materials or services even if the value of
such goods, materials or services exceeds five
thousand rupees in the aggregate in any year
comprised in the period of the contract; but in such a
case, the consent of the Board shall be obtained at a
meeting within three months of the date on which the
contract was entered into.
(d) Every consent of the Board required under this
clause shall be accorded by a resolution passed at a
meeting of the Board and not otherwise; and the
consent of the Board required under sub-clause (a)
above shall not be deemed to have been given within
the meaning of that sub-clause unless the consent is
accorded before the contract is entered into or within
three months of the date on which it was entered into.
(e) If consent is not accorded to any contract under
this clause, anything done in pursuance of the contract
shall be voidable at the option of the Board.
(f) The Directors, so contracting or being so interested
shall not be liable to the Company for any profit
realised by any such contract or the fiduciary relation
thereby established.
(g) The Company shall also comply with such other
provision of Section 297 of the Act, as may be
applicable.
ROTATION OF DIRECTORS
Rotation of Directors
154
Not less than two thirds of the total number of
Directors shall:
(a) be persons whose period of office is liable to
determination by retirement of Directors by rotation,
and
(b) save as otherwise expressly provided in the Act,
307
be appointed by the Company in general meeting.
The remaining Directors shall, in default of and subject
to any regulations in the Articles of the Company, also
be appointed by the Company, in general meeting.
Ascertainment of Directors retiring by
rotation and filling up vacancies
155
(a)
At every annual general meeting one-third of
such of the Directors for the time being as are liable to
retire by rotation, or if their number is not three or a
multiple of three, then the number nearer to one-third,
shall retire from office.
(b) The Directors to retire by rotation at every annual
general meeting shall be those who have been longest
in office since their last appointment, but as between
persons who became Directors on the same day,
those who are to retire shall, in default of and subject
to any agreement amongst themselves, be determined
by lot.
(c) At the annual general meeting at which a Director
retires as aforesaid, the Company may fill up the
vacancy by appointing the retiring Director or some
other person thereto
.
(d)(i) If the place of the retiring Director is not so filled
up and that meeting has not expressly resolved not to
fill the vacancy, the meeting shall stand adjourned till
the same day in the next week, at the same time and
place, or if that day is a public holiday, till the next
succeeding day which is not a public holiday, at the
same time and place.
(ii) If at the adjourned meeting also, the place of the
retiring Director is not filled up and that meeting also
has not expressly resolved not to fill the vacancy, the
retiring Director shall be deemed to have been
reappointed at the adjourned meeting, unless:
(1) at that meeting or at the previous meeting a
resolution for the reappointment of such Director has
been put to the meeting and lost;
(2) the retiring Director has, by a notice in writing
addressed to the Company or its Board of Directors,
expressed his unwillingness to be so re-appointed;
(3) he is not
appointment;
308
qualified
or
is
disqualified
for
(4) a resolution, whether special or ordinary, is
required for his appointment or re-appointment in
virtue of any provisions of the Act; or
(e) The proviso to sub-section (2) of Section 263 of the
Act is applicable to the case.
Right of persons other than retiring
Directors to stand for Directorship
156
Explanation : In this Article and Article 156 the
expression ‘Retiring Director’ means Director retiring
by rotation.
(a) A person who is not a retiring Director shall, in
accordance with Section 257 of the Act and subject to
the provisions of the Act, be eligible for appointment to
the office of Director at any general meeting if he or
some member or members intending to propose him
has, not less than fourteen days before the meeting,
left at the registered office of the Company a notice in
writing under his hand signifying his candidature for
the office of Director or the intention of such member
or members to propose him as a candidate for that
office, as the case may be alongwith a deposit of five
hundred rupees which shall be refunded to such
person or as the case may be, to such member, if the
person succeeds in getting elected as a Director.
(b) The Company shall inform its members of the
candidature of a person for the office of Director or the
intention of a member(s) to propose a person as a
candidate for that office by serving individual notices
on the members not less than seven days before the
meeting in the manner provided under Section 257 of
the Act.
Consent of candidate for Directorship
to be filed with the Registrar
157
Every person who is proposed as a candidate for the
office of Director of the Company shall sign and file
with the Company and with the Registrar, his consent
in writing to act as a Director, if appointed, in
accordance with the provisions of Section 264 of the
Act in so far as they may be applicable.
158
The Directors may meet together as a Board for the
dispatch of business from time to time and shall so
meet at least once in every three months and at least
four such meetings shall be held in every year and
they may adjourn and otherwise regulate their
meetings and proceedings as they deem fit. The
provisions of this Article shall not be deemed to be
PROCEEDINGS OF DIRECTORS
Meeting of Directors
309
When meeting to be convened
159
Directors entitled to notice
160
Questions
decided
at Board meeting how
161
Who to preside at meetings of the
Board
162
Quorum at Board Meeting
163
contravened merely by reason of the fact that
meetings of the Board, which had been called in
compliance with the terms herein mentioned could not
be held for want of quorum.
Any Director of the Company may and the Manager or
Secretary on the requisition of a Director shall, at any
time, summon a meeting of the Board.
Notice of every meeting of the Board of the Company
shall be given in writing to every Director for the time
being in India and at his usual address in India.
Question arising at any time at a meeting of the Board
shall be decided by majority of votes and in case of
equality of votes, the Chairman, in his absence the
Vice Chairman or the Director presiding shall have a
second or casting vote.
(a) The Directors may elect a Chairman of their
meetings and determine the period for which he is to
hold office. The Directors may also appoint a Vice
Chairman of the Board of Directors to preside at the
meetings of the Board of Directors at which the
Chairman shall not be present and determine the
period for which he is to hold office.
(b) All the meetings of the Directors shall be presided
over by the Chairman, if present, but if at any meeting
of Directors the Chairman be not present at the time
appointed for holding the same, the Vice Chairman, if
present, shall preside and if he be not present at such
time then and in that case the Directors shall choose
one of the Directors then present to preside at the
meeting.
(a) The quorum at a meeting of the Director shall be
as prescribed by Section 287 of the Act.
Quorum competent to exercise power
(b) A meeting of the Directors for the time being at
which a quorum is present shall be competent to
exercise all or any of the authorities, powers and
discretions by or under the regulations or the Articles
of the Company for the time being vested in or
exercisable by the Directors generally.
Procedure in case of want of quorum
(c) if a meeting of the Board could not be held for want
of quorum, then the meeting shall automatically stand
adjourned till the same day in the next week, at the
same time and place, or if that day is a Public Holiday,
till the next succeeding day which is not a public
holiday, at the same time and place.
310
Directors may appoint committee
164
Resolution by circular
165
Limit of Directors’ numbers
166
Acts of Board or Committee valid
notwithstanding defect of appointment
167
Subject to the provisions of Section 292 and other
provisions of the Act and Article 165 the Directors may
delegate all or any of their powers to committees
consisting of such member or members of their body
as they think fit, and they may, from time to time
revoke and discharge any such Committee either
wholly or in part, and either as to persons or purposes,
but every Committee so formed shall in the exercise of
the powers so delegated, conform to any regulations
that may from time to time be imposed on it by the
Directors. All acts done by any such Committee in
conformity with such regulations and in fulfillment of
the purposes of their appointments but not otherwise,
shall have the like force and effect as if done by the
Board. Subject to the provisions of the Act the Board
may from time to time fix the remuneration to be paid
to any member or members of that body constituting a
Committee appointed by the Board in terms of these
Articles, and may pay the same.
Subject to the provisions of Section 289 of the Act, a
resolution passed without any meeting of Directors, or
of a Committee of Directors appointed under these
Articles and evidenced by writing under the hands of
all the Directors or members of such Committee as
aforesaid, for the time being in India, be as valid and
effectual as a resolution dully passed at a meeting of
the Directors or of such committee called and held in
accordance with the provisions of these Articles.
Provided that the resolution has been circulated in
draft, together with the necessary papers, if any, to
such Directors, or members of the Committee, then in
India (not being less in number than the quorum fixed
for a meeting of the Board or the Committee as the
case may be) and all other Directors or members at
their usual address in India and has been approved by
such Directors as are then in India or by majority of
such of them, as are entitled to vote on the resolution.
Subject to the provisions of Sections 252, 255 and 259
of the Act, the Company in general meeting may, by
ordinary resolution, increase or reduce the number of
Directors within the limits fixed in that behalf by these
Articles.
All acts done by any meeting of the Directors or by a
Committee of Directors or by any person acting as a
Director, shall notwithstanding that it shall afterwards
be discovered that there was some defect in the
appointment of such Directors or persons acting as
aforesaid, or they or any of them were or was
311
Minutes of proceedings of the Board
and the Committees to be valid
168
Board Minutes to be evidence
169
Register of Directors and Managing
Directors etc.
170
disqualified or that their or his appointment had
terminated by virtue of any provisions contained in
these Articles or the Act, be as valid as if every such
person has been duly appointed and was qualified to
be a Director.
The Directors shall cause minutes to be duly entered
in a book or books provided for the purpose in
accordance with these Articles and Section 193 of the
Act.
Minutes of any meeting of the Board of Directors or of
any Committees of the Board if purporting to be
signed by the Chairman of such meeting or by the
Chairman of the next succeeding meeting shall be for
all purposes whatsoever prima facie evidence of the
actual passing of the resolution recorded and the
actual and regular transaction or occurrence of the
proceedings so recorded and the regularity of the
meeting at which the same shall appear to have taken
place.
The Directors shall cause to be kept at the registered
office of the Company:
(a) (i) A Register of the Directors, Managing Directors,
Manager and Secretary of the Company containing
the particulars required by Section 303 of the Act.
(ii) A Register of Contracts with companies and firms
in which the Directors are interested, containing the
particulars required by Section 301 of the Act, and
(iii) A Register of Directors shareholding containing the
particulars required by Section 307 of the Act. They
shall also cause to be kept other registers and indexes
as required by the Act.
(b) The Company shall comply with the provisions of
Sections 301, 303 and 307 and other Section of the
Act with regard to the inspection of registers and
furnishing copies or extracts so far as the same be
applicable to the Company.
POWERS OF DIRECTORS
Certain powers to be exercised by the
Board only at meeting
171
(a)
Without derogating from the powers vested in
the Board of Directors under these Articles, the Board
shall exercise the following powers on behalf of the
Company and they shall do so only by means of
resolutions passed at meetings of the Board.
312
(i)
The power to make calls on shareholders in
respect of money unpaid on their shares;
(ii)
The power to issue debenture;
(iii)
The power to borrow moneys otherwise than
on debentures;
(iv)
The power to invest the funds of the
Company, and
(v)
The power to make loans.
Provided that the Board may by
resolution passed at the meeting, delegate to any
Committee of Directors, the Managing Director, the
Manager or any other principal officer of the Company
or in the case of a branch office of the Company, a
principal officer of the branch office, the powers
specified in sub-clause (iii), (iv) and (v) to the extent
specified in clauses (b), (c) and (d) respectively on
such condition as the Board may prescribe.
(b) Every resolution delegating the power referred to in
sub-clause (iii) of clause (a) shall specify the total
amount outstanding at any one time upto which
moneys may be borrowed by the delegate.
(c) Every resolution delegating the power referred to in
sub-clause (iv) of clause (a) shall specify the total
amount upto which the funds of the Company may be
invested and the nature of the investments which may
be made by the delegate.
(d) Every resolution delegating the power referred to in
sub-clause (v) of clause (a) shall specify the total
amount upto which loans may be made by the
delegates, the purpose for which the loans may be
and the maximum amount upto which loans may be
made for each such purpose in individual cases.
Restriction on powers of Board
172
(e) Nothing in this Article shall be deemed to affect the
right of the Company in general meeting to impose
restrictions and conditions on the exercise by the
Board of any other powers referred to in sub-clauses
(i), (ii), (iii), (iv) and (v) of clause (a) above.
(a)
The Board of Directors of the Company shall
not except with the consent of the Company in general
meeting:
(i)
sell, lease or otherwise
dispose of the whole, or substantially the whole, of the
313
undertaking of the Company, or where the Company
owns more than one undertaking of the whole or
substantially the whole of any such undertaking.;
(ii)
remit, or give time for the repayment of any
debt, due by a Director;
(iii)
invest, otherwise than in trust securities, the
amount of compensation received by the Company in
respect of the compulsory acquisition of any such
undertaking as is referred to in sub-clause (i) above,
or of any premises or properties used for any such
undertaking and without which it cannot be carried on
or can be carried on only with difficulty or only after a
considerable time;
(iv) borrow moneys, where the money to be borrowed,
together with the moneys already borrowed by the
Company (apart from the temporary loans obtained
from the Company’s bankers in the ordinary course of
business) will exceed the aggregate of the paid-up
capital of the Company and its free reserves that is to
say, reserves not set apart for any specific purpose; or
(v) contribute to charitable and other funds not directly
relating to the business of the Company or the welfare
of its employees any amounts the aggregate of which
will in any financial year, exceed fifty thousand rupees
or five percent of its average net profits as determined
in accordance with the provisions of Sections 349 and
350 of the Act during the three financial years,
immediately proceedings, whichever is greater.
(b)Nothing contained in sub-clause (a) above shall
affect:
(i) the title of a buyer or other person who buys or
takes a lease of any such undertaking as is referred to
in that sub-clause in good faith and after exercising
due care and caution, or
(ii)the selling or leasing of any property of the
Company where the ordinary business of the
Company consists of, or comprises such selling or
leasing.
(c) Any resolution passed by the Company permitting
any transaction such as is referred to in sub-clause (a)
(i) above, may attach such conditions to the
314
permission as may be specified in the resolution,
including conditions regarding the use, disposal or
investment of the sale proceeds which may result from
the transaction. Provided that this clause shall not be
deemed to authorise the Company to effect any
reduction in its capital except in accordance with the
provisions contained in that behalf in the Act.
(d)No debt incurred by the Company in excess of the
limit imposed by sub-clause (iv) of clause (a) above,
shall be valid or effectual, unless the lender proves
that he advanced the loan in good faith and without
knowledge that the limit imposed by that clause had
been exceeded.
Prohibition regarding making of political contributions
(e) Due regard and compliance shall be observed in
regard to matters dealt with by or in the Explanation
contained in sub-section (1) of Section 293 of the Act
and in regard to the limitations on the power of the
Company contained in Section 293A of the Act.
General powers of
vested in Directors
the
Company
Specific powers given to Directors
173
174
Subject to the provisions of the Act, the management
of the business of the Company shall be vested in the
Directors and the Directors may exercise all such
powers and do all such acts and things as the
Company is by the Memorandum of Association or
otherwise authorised to exercise and do and not
hereby or by the statute or otherwise directed or
required to be exercised or done by the Company in
General Meeting, but subject nevertheless to the
provisions of the Act and other Act and of the
Memorandum of Association and these Articles and to
any regulations, not being inconsistent with the
Memorandum of Association and these Articles or the
Act, from time to time made by the company in
general meeting provided that no such regulation shall
invalidate any prior act of the Directors which would
have been valid if such regulation had not been made.
Without prejudice to the general powers conferred by
Article 172 and the other powers conferred by these
presents and so as not in any way to limit any or all of
those powers, it is hereby expressly declared that the
Directors shall have the following powers :
To pay registration expense
(i)
to pay the costs, charges and expenses
preliminary and incidental to the promotion, formation,
establishment and registration of the Company;
315
(ii)
to pay and charge to the capital account of the
Company any interest lawfully payable thereon under
the provisions of Sections 76 and 208 of the Act.
To acquire property
(iii)
Subject to the provisions of the Act and these
Articles to purchase or otherwise acquire any lands,
buildings, machinery, premises, hereditaments,
property effects, assets, rights, credits, royalties,
bounties and goodwill of any person, firm or Company
carrying on the business which this Company is
authorised to carry on, at or for such price or
consideration and generally on such terms and
conditions as they may think fit; and in any such
purchase or acquisition to accept such title as the
Board may believe or may be advised to be
reasonably satisfactory;
To purchase lands, buildings etc.
(iv)
Subject to the provisions of the Act to
purchase, or take on lease for any term or terms of
years, or otherwise acquire any mills or factories or
any land or lands, with or without buildings and
outhouses thereon, situate in any part of India, at such
price or rent and under and subject to such terms and
conditions as the Directors may think fit; and in any
such purchase, lease or other acquisition to accept
such title as the Directors may believe or may be
advised to be reasonably satisfactory;
To construct buildings
(v)
To erect, construct, enlarge, improve, alter,
maintain, pull down, rebuild or reconstruct any
buildings, factories, offices, workshops or other
structures, necessary or convenient for the purposes
of the Company and to acquire lands for the purposes
of the Company;
To mortgage, charge property
(vi)
To let, mortgage, charge, sell or otherwise
dispose of subject to the provisions of Section 293 of
the Act, any property of the Company either absolutely
or conditionally and in such manner and upon such
terms and conditions in all respects as they think fit
and to accept payment or satisfaction for the same in
cash or otherwise, as they may think fit;
To pay for property etc.
(vii)
At their discretion to pay for any property,
316
rights or privileges acquired by or services rendered to
the Company, either wholly or partially, in cash or in
shares, bonds, debentures, debenture stock or other
securities of the Company, and any such shares may
be issued either as fully paid up or with such amount
credited as paid up thereon as may be agreed upon;
and any such bonds, debentures, debenture-stock or
other securities may be either specifically charged
upon all or any part of the property of the Company
and its uncalled capital or not so charged;
To insure
(viii)To insure and keep insured against loss or
damage by fire or otherwise for such period and to
such extent as they may think proper, all or any part of
the building, machinery, goods, stores, produce and
other moveable property of the Company either
separately or co-jointly; also to insure all or any portion
of the goods, produce, machinery and other articles
imported or exported by the Company and to sell,
assign, surrender or discontinue any policies of
assurance effected in pursuance of this power;
To open accounts
(ix) Subject to Section 292 of the Act, to open
accounts with any bank or bankers or with any
Company, firm, or individual and to pay money into
and draw money from any account from time to time
as the Directors may think fit;
To secure contracts
(x) To secure the fulfillment of any contracts or
engagements entered into by the Company by
mortgage or charge of all or any of the properties of
the Company and its unpaid capital for the time being
or in such other manner as they may think fit;
To attach to Shares such conditions
(xi) To attach to any shares to be issued as the
consideration for any contract with or property
acquired by the Company, or in payment for services
rendered to the Company, such conditions, subject to
the provisions of the Act, as to the transfer thereof as
they may think fit;
To accept surrender of shares
(xii) To accept from any member on such terms and
conditions as shall be agreed a surrender of his
shares or stock or any part thereof subject to the
provisions of the Act;
317
To appoint trustees
(xiii)To appoint any person or persons (whether
incorporated or not) to accept and hold in trust for the
Company any property belonging to the Company or
in which it is interested or for any other purposes and
to execute and do all such deeds and things as may
be requisite in relation to any such trusts and to
provide for the remuneration of such trustee or
trustees;
To bring and defend actions
(xiv) To institute, conduct, defend, compound or
abandon any legal proceedings by or against the
Company or its Officers or otherwise concerning the
affairs of the Company and also subject to the
provisions of Section 293 of the Act to compound and
allow time for payment or satisfaction of any debts
due, or of any claims or demands by or against the
Company;
To refer to arbitration
(xv) To refer, subject to the provisions of Section 293
of the Act, any claims or demands by or against the
Company to arbitration and observe and perform the
awards;
To act on insolvency matters
(xvi) To act on behalf of the Company in all matters
relating to bankrupts and insolvents;
To give receipts
(xvii) To make and give receipts, releases and other
discharges for moneys payable to the Company and
for the claims and demands of the Company subject to
the provisions of Section 293 of the Act.
To authorise acceptances
(xviii) To determine from time to time as to who shall
be entitled to sign bills, notes, receipts, acceptances,
endorsements, cheques, dividend warrants, releases,
contracts and documents on the Company’s behalf;
To invest moneys
(xix)
Subject to the provisions of Sections 292, 293,
370, 372 of the Act, invest and deal with any of the
moneys of the Company, not immediately required for
the purpose thereof, upon such shares, securities, or
investments (not being shares in this Company) and in
such manner as they may think fit, and from time to
318
time to vary or realise such investments;
To provide for personal liabilities
(xx)
To execute in the name and on behalf of the
Company in favour of any Director or other person
who may incur or be about to incur any personal
liability for the for benefit of the Company, such
mortgages of the Company’s property (present and
future) as they may think fit and any such mortgage
may contain a power of sale and such other powers,
covenants and provisions as shall be agreed on;
To give to Directors etc. an interest in business
(xxi)
Subject to such sanction as may be necessary
under the Act or these Articles, to give to any Director,
Officer, or other person employed by the Company, an
interest in any particular business or transaction either
by way of commission on the gross expenditure
thereon or otherwise or a share in the general profits
of the Company, and such interest, commission or
share of profits shall be treated as part of the working
expenses of the Company.
To provide for welfare of employees
(xxii) To provide for the welfare of employees or exemployees of the Company and their wives, widows,
families, dependants or connections of such persons
by building or contributing to the building of houses,
dwelling, or chaws or by grants of money, pensions,
allowances, gratuities, bonus or payments by creating
and from time to time subscribing or contributing to
provident and other funds, institutions or trusts and by
providing or subscribing or contributing towards places
of instruction and recreation, hospitals and
dispensaries, medical and other attendances and
other assistance as the Directors shall think fit.
To subscribe to charitable and other funds
(xxiii) To subscribe or contribute or otherwise to
assist or to guarantee money to charitable benevolent,
religious, scientific, national public or any other useful
institutions, object or purposes for any exhibition;
To maintain pension funds
(xxiv) To establish and maintain or procure the
establishment and maintenance of any contributory or
non-contributory pension or superannuation funds for
the benefit of, and give or procure the giving of
donations, gratuities, pensions, allowances or
319
emoluments, to any persons who are or were at any
time in the employment or services of the Company,
or of any Company which is a subsidiary of the
Company or is allied to or associated with the
Company or with any such subsidiary Company, or
who are or were at any time Directors or Officers of
the Company or of any such other Company as
aforesaid, and the wives, widows, families and
dependants of any such persons and, also to establish
and subsidies and subscribe to any institutions,
associations, clubs or funds collected to be for the
benefit of or to advance the interests and well being of
the Company or of any such other Company as
aforesaid, and make payments to or towards the
insurance of any such person as aforesaid and do any
of the matters aforesaid, either alone or in conjunction
with any such other company as aforesaid;
(xxv) To decide and allocate the expenditure on
capital and revenue account either for the year or
period or spread over the years.
To create Reserve Fund
(xxvi) Before recommending any dividend, to set
aside out of profits of the Company such sums as they
may think proper for depreciation or to Depreciation
Fund or Reserve Fund or Sinking Fund or any other
special fund to meet contingencies or to repay
redeemable preference shares, debentures, or
debenture stock or for special dividends or for
equalising dividend or for repairing, improving,
extending and maintaining any part of the property of
the Company, and for such other purposes as the
Directors may, in their absolute discretion, think
conducive to the interests of the Company and to
invest the several sums so set aside or so much
thereof as required to be invested upon such
investments (subject to the restrictions imposed by
Sections 292 and 293 and other provisions of the Act)
as the Directors may think fit, and from time to time, to
deal with and vary such investments and dispose of
and apply and expend all or any part thereof for the
benefit of the Company in such manner and for such
purposes as the Directors (subject to such restrictions
as aforesaid) in their absolute discretion think
conducive to the interests of the Company
notwithstanding that the matters to which the Directors
apply or upon which they may expend the same or
any part thereof may be matters to or upon which the
320
Capital moneys of the Company might rightly be
applied or expended; and to divide the Reserve Fund
into such special funds as the Directors think fit, and to
employ the assets constituting all or any of the above
funds, including the Depreciation Fund, in the
business of the Company or in repayment or
redemption or redeemable preference shares,
debentures or debenture stock and that without being
bound to keep the same separate from other assets or
to pay interest on the same, with power, however to
the Directors at their discretion, to pay or allow to the
credit of such fund interest at such rate as the
Directors may think proper.
To appoint Managers etc
(xxvii) To appoint and at their discretion to remove or
suspend such Managers, Secretaries, Officers, Clerks,
Agents and servants for permanent, temporary or
special service as they may from time to time think fit,
and to determine their powers and duties, and fix their
salaries or emoluments and require security in such
instances and to such amounts as they may think fit,
and from time to time to provide for the management
and transactions of the affairs of the Company in any
special locality in India in such manner as they may
think fit. the provisions contained in the clause
following shall be without prejudice to the general
powers conferred by this clause.
To authorise by Power of Attorney
(xxviii) At any time and from time to time by Power of
Attorney to appoint any person or persons to be the
Attorney or Attorneys of the Company for such
purposes and with such powers, authorities and
discretions (not exceeding those vested in or
exercisable by the Directors under these presents)
and for such period and subject to such conditions as
the Directors may from time to time think fit and any
such appointment (if the Directors may think fit) be
made in favour of any Company or the members,
Directors, nominees or managers of any Company or
firm or otherwise in favour of any fluctuating body or
person whether nominated, directly or indirectly by the
Directors and any such power of attorney may contain
any such powers for the protection or convenience of
persons dealing with such Attorneys as the Directors
may think fit; and may contain powers enabling any
321
such delegates or Attorneys as aforesaid to subdelegate all or any of the powers, authorities, and
discretions for the time being vested in them.
To authorize, delegate
(xxix) Subject to the provisions of the Act, generally
and from time to time and at any time to authorise,
empower or delegate to (with or without powers of
Sub-delegation) any Director, Officer or Officers or
Employee for the time being of the Company and/or
any other person, firm or Company all or any of the
powers, authorities and discretions for the time being
vested in the Directors by these presents, subject to
such restrictions and conditions, if any, as the
Directors may think proper.
To Negotiate
(xxx) To enter into all such negotiations, contracts
and rescind and/or vary all such contracts and to
execute and do all such acts, deeds, and things in the
name of on behalf of the Company as they may
consider expedient for or in relation to any of the
matters aforesaid or otherwise for the purposes of the
Company.
MANAGING DIRECTORS
Power to appoint
Wholetime Directors
Managing
or
175
(a) Subject to the provisions of the Act and of these
Articles the Board shall have power to appoint from
time to time any of its members as Managing Director
or Managing Directors and/or Wholetime Directors
and/or Special Directors like Technical Director,
Financial Director, etc. of the Company for a fixed
term not exceeding five years at a time and upon such
terms and conditions as the Board thinks fit, and the
Board may by resolution vest in such Managing
Director or Managing Directors/Wholetime Director(s),
Technical Director(s) Financial Director(s) and Special
Director(s) such of the powers hereby vested in the
Board generally as it thinks fit, and such powers may
be made exercisable for such period or periods, and
upon such conditions and subject to such restrictions
as it may determine, the remuneration of such
Directors may be by way of monthly remuneration
and/or fee for each meeting and/or participation in
profits, or by any or all of those modes, or of any other
322
mode not expressly prohibited by the Act.
(b) The Directors may whenever they appoint more
than one Managing Director, designate one or more of
them as “Joint Managing Director” or “Joint Managing
Directors” or “Deputy Managing Directors” as the case
may be.
Appointment and payment of remuneration to
Managing or Wholetime Director
(c)
Subject to the provisions of Sections 198, 269,
309, 310 and 311 of the Act, the appointment and
payment of remuneration to the above Director shall
be subject to approval of the members in general
meeting and of the Central Government.
THE SECRETARY
Secretary
176
Subject to the provisions of Section 383A of the Act,
the Directors may, from time to time, appoint and, at
their discretion remove any individual (hereinafter
called ‘the Secretary’) who shall have such
qualifications as the authority under the Act may
prescribe to perform any functions, which by the Act or
these Articles are to be performed, by the Secretary,
and to execute any other purely ministerial or
administrative duties which may from time to time be
assigned to the Secretary by the Director. The
Directors may also at any time appoint some persons
(who need not be the Secretary) to keep the registers
required to be kept by the Company.
177
. (a) The Directors shall provide a Common Seal for
the purpose of the Company and shall have power
from time to time to destroy the same and substitute a
new Seal in lieu thereof, and the Directors shall
provide for the safe custody of the Seal for the time
being and the Seal shall never be used except by or
under the authority of the Directors or a Committee of
the Directors previously given, and in the presence of
one Director at the least, who shall sign every
instrument to which the Seal is so affixed in his
presence.
SEAL
The seal, its custody and use
Seal abroad
(b)
The Company shall also be at liberty to have
323
an official seal in accordance with Section 50 of the
Act for use in any territory, district or place outside
India and such powers shall accordingly be vested in
the Directors.
INTEREST OUT OF CAPITAL
Interest may be paid out of Capital
178
Where any shares in the Company are issued for the
purpose of raising money to defray the expenses of
the construction of any work or building, or the
provisions of any plant, which cannot be made
profitable for a lengthy period, the Company may pay
interest on so much of that share capital as is for the
time being paid up, for the period and at the rate and
subject to the conditions and restrictions provided by
Section 208 of the Act, and may charge the same to
capital as part of the cost of construction of the work
or building, or the provisions of plant.
Division of Profits
179
Dividend payable to registered holder
180
Time for payment of dividend
181
Capital paid up in advance and
interest not to earn dividend
182
Dividends in proportion to amount
paid up
183
The profits of the Company subject to any special
rights relating thereto created or authorised to be
created by these presents shall be divisible among the
members in proportion to the amount of Capital paid
up or credited as paid up on the shares held by them
respectively.
No dividend shall be paid by the Company in respect
of any share except to the registered holder of such
share or to his order or to his banker.
Where a dividend has been declared by the Company
it shall be paid within the period provided in Section
207 of the Act.
Where the Capital is paid up in advance of calls upon
the footing that the same shall carry interest, such
Capital shall not, whilst carrying interest confer a right
to dividend or to participate in profits.
(a) The Company shall pay dividends in proportion to
the amounts paid up or credited as paid up on each
share, when a larger amount is paid up or credited as
paid up on some shares than on others. Nothing in
this Article shall be deemed to affect in any manner
the operation of Section 208 of the Act.
DIVIDENDS
(b) Provided always that any Capital paid up on a
share during the period in respect of which a dividend
is declared, shall unless the terms of issue otherwise
provide, only entitle the holder of such share to an
apportioned amount of such dividend proportionate to
324
Company in Annual General Meeting
may declare dividends
184
Power of Directors to limit dividends
185
Dividends only to be paid out of
profits
186
the capital from time to time paid during such period
on such share shall rank for dividend accordingly.
The Company in Annual general meeting may declare
a dividend to be paid to the members according to
their respective rights and interests in the profits and
may fix the time for payment.
No larger dividend shall be declared than is
recommended by the Directors but the Company in
general meeting may declare a smaller dividend.
No dividend shall be declared or paid by the Company
otherwise than out of profits of the financial year
arrived at after providing for depreciation in
accordance with the provisions of sub-section (2) of
Section 205 of the Act or out of the profits of the
Company for any previous financial year or years
arrived at after providing for depreciation in
accordance with these provisions and remaining
undistributed or out of both or out of moneys provided
by the Central Government or a State Government for
the payment of dividend in pursuance of the guarantee
given by that Government provided that:
(a) If the Company has not provided for depreciation
for any previous financial year or years, it shall before
declaring or paying a dividend for any financial year,
provide for such depreciation out of the profits of that
financial year or out of the profits of any other previous
financial year or years;
(b) If the Company has incurred any loss in any
previous financial year or years the amount of the loss
or an amount which is equal to the amount provided
for depreciation for that year or those years whichever
is less, shall be set off against the profits of the
Company for the year for which the dividend is
proposed to be declared or paid or against the profits
of the Company for any previous financial year or
years arrived at in both cases after providing for
depreciation in accordance with the provisions of subsection (2) of Section 205 of the Act or against both.
Provided further that, no dividend shall be declared or
paid for any financial year out of the profits of the
Company for that year arrived at after providing for
depreciation as above, except after the transfer to the
reserves of the Company of such percentage of its
profits for that year as may be prescribed in
accordance with Section 205 of the Act or such higher
percentage of its profits as may be allowed in
325
accordance with that Section.
Directors’ declaration as to net profits
conclusive
Interim Dividends
187
Retention of Dividend until completion
of transfer under Article
189
188
190
Transferred
registered
shares
must
be
191
Dividend how remitted
192
Unpaid Dividend or Dividend Warrant
posted
193
Nothing contained in this Article shall be deemed to
affect in any manner the operation of Section 208 of
the Act.
The declaration of the Directors as to the amount of
the net profits of the Company shall be conclusive.
The Directors may, from time to time, pay to the
members such interim dividends as in their judgment
the position of the Company justifies.
The Directors may retain the Dividends upon shares in
respect of which any person is under the Transmission
clause of these Articles entitled to become a member
or which any person under that clause is entitled to
transfer until such person shall become a member in
respect of such shares or shall duly transfer the same.
No member to receive Dividend whilst indebted to the
Company and Company’s right to reimbursement
there from
Subject to the provisions of the Act, no member shall
be entitled to receive payment of any interest or
dividend in respect of his share(s) whilst any money
may be due or owing from him to the Company in
respect of such share(s) or debenture(s) or otherwise
however either alone or jointly with any other person
or persons and the Directors may deduct from the
interest or dividend payable to any member, all sums
of moneys so due from him to the Company.
A transfer of shares shall not pass the right to any
dividend declared thereon before the registration of
the transfer.
Unless otherwise directed any dividend may be paid
by cheque or warrant or a pay-slip or receipt having
the force of a cheque or warrant sent through ordinary
post to the registered address of the member or
person entitled or in the case of joint holders to that
one of them first named in the Register of Members in
respect of the joint holding. Every such cheque or
warrant so sent shall be made payable to the
registered holder of shares or to his order or to his
bankers. The Company shall not be liable or
responsible for any cheque or warrant lost in
transmission or for any dividend lost, to the member or
person entitled thereto by the forged endorsement of
any cheque or warrant or the fraudulent or improper
recovery thereof by any other means.
(a) Where the Company has declared a dividend but
which has not been paid or the dividend warrant in
326
respect thereof has not been posted within 30 days
from the date of declaration to any shareholder
entitled to the payment of the dividend, the Company
shall within 7 days from the date of expiry of the said
period of 30 days, open a special account in that
behalf in any scheduled bank as per section 205 A of
the Act, and transfer to the said account, the total
amount of dividend which remains unpaid or in relation
to which no dividend warrant has been posted.
(b) Any money transferred to the unpaid dividend
account of the Company which remains unpaid or
unclaimed for a period of seven years from the date of
such transfer, shall be transferred by the Company to
the investor education and protection fund.
Dividend and all together
194
Dividend to be payable in cash
195
CAPITALISATION
196
(c) No unpaid or unclaimed dividend shall be forfeited
by the Board.
Any general meeting declaring a dividend may on the
recommendation of the Directors make a call on the
members for such amount as the meeting fixes, but so
that the call on each member shall not exceed the
dividend payable to him so that the call be made
payable at the same time as the dividend and the
dividend may, if so arranged between the Company
and the members, be set off against the calls.
No dividend shall be payable except in cash. Provided
that nothing in this Article shall be deemed to prohibit
the capitalisation of profit or reserves of the Company
for the purpose of issuing fully paid up bonus shares
or paying up any amount for the time being unpaid on
any shares held by the members of the Company.
(a) Any general meeting may resolve that any amount
standing to the credit of the Share Premium Account
or the Capital Redemption Reserve Account or any
moneys’ investments or other assets forming part of
the undivided profits (including profits or surplus
moneys arising from the realisation and where
permitted by law, from the appreciation in value of any
capital assets of the Company) standing to the credit
of the General Reserve, Reserve or any Reserve
Fund or any other fund of the Company or in the
hands of the Company and available for dividend may
be capitalised. Any such amount (excepting the
amount standing to the Share Premium Account
and/or the Capital Redemption Reserve Account) may
be capitalised :
(i) by the issue and distribution as fully paid shares,
327
debentures, debenture stock, bonds or obligations of
the Company or
(ii) by crediting the shares of the Company which may
have been issued and are not fully paid up, with the
whole or any part of the sum remaining unpaid
thereon.
Provided that any amounts standing to the credit of
the Share Premium Account may be applied in;
(1) paying up un-issued shares of the Company to be
issued to members of the Company as fully paid
bonus shares;
(2) in writing off the preliminary expenses of the
Company;
(3) in writing off the expenses of, or the commission
paid or discount allowed on any issue of shares or
debentures of the Company; or
(4) in providing for the premium payable on the
redemption of any redeemable preference shares or of
any debentures of the Company. Provided further that
any amount standing to the credit of the Capital
Redemption Reserve Account shall be applied only in
paying up un-issued shares of the Company to be
issued to the members of the Company as fully paid
bonus shares.
(b) Such issue and distribution under sub-clause (a) (i)
above and such payment to the credit of unpaid share
capital under sub-clause (a) (ii) above shall be made
to, among and in favour of the members of any class
of them or any of them entitled thereto and in
accordance with their respective rights and interests
and in proportion to the amount of capital paid up on
the shares held by them respectively in respect of
which such distribution under sub-clause (a) (i) or
payment under sub-clause (a) (ii) above shall be made
on the footing that such members become entitled
thereto as capital.
(c) The Directors shall give effect to any such
resolution and apply portion of the Profits, General
Reserve Fund or any other fund or account as
aforesaid as may be required for the purpose of
making payment in full for the shares, debentures or
328
debenture stock, bonds or other obligations of the
Company so distributed under sub-clause (a)(i) above
or (as the case may be) for the purpose of paying, in
whole or in part, the amount remaining unpaid on the
shares which may have been issued and are not fully
paid-up under sub-clause (a)(ii) above provided that
no such distribution or payment shall be made unless
recommended by Directors and if so recommended
such distribution and payment shall be accepted by
such members as aforesaid in full satisfaction of their
interest in the said capitalised sum.
(d) For the purpose of giving effect to any such
resolution the Directors may settle any difficulty which
may arise in regard to the distribution or payment as
aforesaid as they think expedient and in particular they
may issue fractional certificates or coupons and fix
value for distribution of any specific assets and may
determine that such payments be made to any
members on the footing of the value so fixed and may
vest any such cash, shares, fractional certificates or
coupons, debentures, debenture stock, bonds, or
other obligations in trustees upon such trusts for the
persons entitled thereto as may seem expedient to the
Directors and generally may make such arrangement
for the acceptance, allotment and sale of such shares,
debentures, debenture stock, bonds or other
obligations and fractional certificates or coupons or
otherwise as they may think fit.
(e) Subject to the provisions of the Act and these
Articles in cases where some of the shares of the
Company are fully paid and others are partly paid
only, such capitalisation may be effected by the
distribution of further shares in respect of the fully paid
shares, and by crediting the partly paid shares with the
whole or part of the unpaid liability thereon but so that
as between the holders of fully paid shares and the
partly paid shares the sums so applied in the payment
of such further shares and in the extinguishment of
diminution of the liability on the partly paid shares shall
be so applied pro rata in proportion to the amount then
already paid or credited as paid on the existing fully
paid and partly paid shares respectively.
When deemed requisite a proper contract shall be
filed with the Registrar of Companies in accordance
with the Act and the Board may appoint any person to
sign such contract on behalf of the members entitled
as aforesaid and such appointment shall be effective.
329
197
When deemed requisite a proper contract shall be
filed with the Registrar of Companies in accordance
with the Act and the Board may appoint any person to
sign such contract on behalf of the members entitled
as aforesaid and such appointment shall be effective.
Accounts
198
Books of Accounts to be kept
199
The provisions of Sections 209 to 222 of the Act shall
be complied with in so far as the same be applicable
to the Company
(a) The Company shall keep at its Registered Office
proper books of accounts as required by Section 209
of the Act with respect to :
ACCOUNTS
(i) all sums of money received and expended by the
Company and the matters in respect of which the
receipt and expenditure take place;
(ii) all sales and purchases of goods by the Company;
and
(iii) the assets and liabilities of the Company.
Provided that all or any of the books
of account aforesaid may be kept at such other place
in India as the Board of Directors may decide and
when the Board of Directors so decide, the Company
shall, within seven days of the decision file with the
Registrar a notice in writing giving the full address of
that other place.
Books to give fair and true view of the
Company’s affairs
200
(b) If the Company shall have a branch office, whether
in or outside India, proper books of account relating to
the transactions effected at that office shall be kept at
that office and proper summarized returns made upto
date at intervals of not more than three months, shall
be sent by the branch office to the Company at its
Registered Office or other place in India, as the Board
thinks fit, where the said books of the Company are
kept.
(a) All the aforesaid books shall give a fair and true
view of the affairs of the Company of its branch office,
as the case may be with respect to the matters
aforesaid, and explain the transactions.
(b) The books of account shall be open to inspection
by any Director during business hours as provided by
Section 209 of the Act.
330
Inspection by members
Statements of Accounts to
furnished to General Meeting
201
be
202
Balance Sheet and Profit and Loss
Account
203
(c) The books of account of the Company relating to a
period of not less than eight years immediately
preceding the current year together with the vouchers
relevant to any entry in such books of accounts shall
be preserved in good order.
The Directors shall from time to time determine
whether and to what extent and at what times and
places and under what conditions or regulations the
accounts, books and documents of the Company or
any of them, shall be open to the inspection of the
members, and no member (not being a Director) shall
have any right of inspecting any account or books or
documents of the Company except as conferred by
statute or authorized by the Directors or by a
resolution of the Company in general meeting.
The Board of Directors shall lay before each annual
general meeting a Profit and Loss Account for the
financial year of the Company and a Balance sheet
made up as at the end of the financial year which shall
be a date, which shall not precede the day of the
meeting by more than six months or such extended
period as shall have been granted by the Registrar of
Companies under the provisions of the Act.
(a) Subject to the provisions of Section 211 of the Act,
every Balance Sheet and Profit and Loss Account of
the Company shall be in the forms set out in parts I
and II respectively of Schedule VI of the Act, or as
near thereto as circumstances admit. There shall be
annexed to every Balance Sheet a statement showing
the bodies corporate (indicating separately the bodies
corporate in the same group) in the shares of which
investments have been made by it (including all
investments, whether existing or not, made
subsequent to the date as at which the previous
Balance Sheet was made out) and the nature and
extent of the investments so made in each body
corporate.
(b) So long as the Company is a holding Company
having a subsidiary the Company shall conform to
Section 212 and other applicable provisions of the Act.
Authentication of Balance Sheet and
204
(c) If in the opinion of the Board, any of the current
assets of the Company have not a value on realization
in the ordinary course of business at least equal to the
amount at which they are stated, the fact that the
Board is of that opinion shall be stated.
(a) (i) Save as provided by item (ii) of this sub-clause
331
Profit & Loss Account
every Balance Sheet and every Profit and Loss
Account of the Company shall be signed on behalf of
the Board of Directors by the Manager or Secretary, if
any, and by not less than two Directors of the
Company, one of whom shall be a Managing Director,
if any.
(ii) When only one of the Directors of the Company is
for the time being in India, the Balance Sheet and the
Profit and Loss Account shall be signed by such
Director, but in such a case, there shall be attached to
the Balance Sheet and the Profit and Loss Account a
statement signed by him explaining the reason for
non-compliance with the provisions of the above item
(b) The Balance Sheet, and the Profit and Loss
Account, shall be approved by the Board of Directors
before they are signed on behalf of the Board in
accordance with the provisions of this Article and
before they are submitted to the auditors for their
report thereon.
Profit and Loss Account to be
annexed and Auditors’ Report to be
attached to the Balance sheet
205
Board’s Report to be attached to
Balance Sheet
206
The Profit and Loss Account shall be annexed to the
Balance Sheet and the Auditors’ Report including the
Auditors’ separate, special or supplementary report, if
any, shall be attached thereto.
(a) Every Balance Sheet laid before the Company in
general meeting shall have attached to it a Report by
the Board of Directors with respect to the state of the
Company’s affairs; the amounts, if any which it
proposes to carry to any reserves in such Balance
Sheet, the amount, if any, which it recommends to be
paid by way of dividends and material changes and
commitments, if any, affecting the financial position of
the Company which have occurred between the end of
the financial year of the Company to which the
Balance Sheet relates and the date of the Report.
(b) The Report shall, so far as it is material for the
appreciation of the state of the Company’s affairs by
its members and will not in the Board’s opinion be
harmful to the business of the Company or of any of
its subsidiaries, deal with any changes which have
occurred during the financial year in the nature of the
Company’s business, in the Company’s subsidiaries
or in the nature of the business in which the Company
has an interest.
(c) The Board shall also give the fullest information
and explanations in its Report or in cases falling under
332
the proviso to Section 222 of the Act in an addendum
to that Report, on every reservation, qualification or
adverse remark contained in the Auditor’s Report.
(d) The Board’s Report and addendum (if any) thereto
shall be signed by its Chairman if he is authorized in
that behalf by the Board; and where he is not so
authorized shall be signed by such number of
Directors as are required to sign the Balance Sheet
and the Profit and Loss Account of the Company by
virtue of sub-clauses (a) and (b) of Article 203.
(e) The Board shall have the right to charge any
person not being a Director with the duty of seeing
that the provisions of sub-clauses (a) and (c) of this
Article are complied with.
(f) Every Balance Sheet and Profit and Loss account
of the Company when audited and approved and
adopted by the members in the annual general
meeting shall be conclusive except as regards any
matters in respect of which modifications are made
thereto as may from time to time be considered
necessary by the Board of Directors and or considered
proper by reason of any provisions of relevant
applicable statutes and approved by shareholders at a
subsequent general meeting.
Right of Members to copies of
Balance Sheet and Auditor’s Report
207
Three copies of Balance Sheet etc. to
be filed with Registrar
208
A copy of every Balance Sheet (including the Profit
and Loss Account, the Auditor’s Report and every
other document required by Law to be annexed or
attached as the case may be, to the Balance Sheet)
which is to be laid before the Company in General
Meeting shall be made available for inspection at the
Registered Office of the Company during working
hours for a period of twenty one days before of the
meeting.
After the Balance Sheet and Profit and Loss Account
have been laid before the Company at the annual
general meeting, three copies of the Balance Sheet
and Profit and Loss Account duly signed as provided
under Section 220 of the Act together with three
copies of all documents, which are required to be
annexed thereto shall be filed with the Registrar, so far
as the same be applicable to the Company
AUDIT
Accounts to be audited
209
Every Balance Sheet and Profit and Loss Account
333
Appointment and qualifications of
auditors
210
shall be audited by one or more Auditors to be
appointed as hereinafter mentioned.
(a) The Company at the annual general meeting each
year shall appoint an Auditor or Auditors to hold office
from the conclusion of that meeting until the
conclusion of the next annual general meeting, and
shall within seven days of the appointment, give
intimation thereof to every auditor so appointed.
(b) At any annual general meeting, a retiring Auditor,
by whatever authority appointed, shall be reappointed
unless :
(i) he is not qualified for reappointment;
(ii) he has given the Company notice in writing of his
unwillingness to be reappointed;
(iii) a resolution has been passed at that meeting
appointing somebody instead of him or providing
expressly that he shall not be reappointed, or
(iv) where notice has been given of an intended
resolution to appoint some person or persons in the
place of retiring Auditor, and by reason of the death,
incapacity or disqualification of that person or of all
those persons, as the case may be, the resolution
cannot be proceeded with.
(c) Where at an annual general meeting no auditors
are appointed or reappointed, the Central Government
may appoint a person to fill the vacancy.
(d) The Company shall, within seven days of the
Central Government’s power under sub-clause (c)
becoming exercisable give notice of that fact to the
Government.
(e) The Directors may fill any casual vacancy in the
office of Auditor, but while any such vacancy
continues the serving or continuing Auditor or Auditors
(if any) may act, but where such vacancy be caused
by the resignation of an auditor, the vacancy shall only
be filled by the Company in general meeting.
(f) A person, other than a retiring Auditor, shall not be
capable of being appointed at an annual general
meeting unless special notice of the Resolution for
appointment of that person to the office of Auditor has
334
been given by a member to the Company not less
than fourteen days before the meeting in accordance
with Section 190 of the Act, and the company shall
send a copy of any such notice to the retiring Auditor
and shall give notice thereof to the members in
accordance with Section 190 of the Act, and the
provisions of Section 225 of the Act shall apply in the
matter. The provision of this sub-clause shall also
apply to a Resolution that a retiring Auditor shall not
be re-appointed.
(g) The persons qualified for appointment as Auditors
shall be only those referred to in Section 226 of the
Act.
Audit of Branch Office
211
Remuneration of Auditors
212
Auditor to have access to the books
of the Company
213
(h) None of the persons mentioned in Section 226 of
the Act as being not qualified for appointment as
Auditors shall be appointed of the Company.
The Company shall comply with the provisions of
Section 228 of the Act in relation to the audit of the
accounts of branch offices of the Company except to
the extent to which any exemption may be granted by
the Central Government, in that behalf.
The remuneration of the Auditors shall be fixed by the
Company in general meeting in such manner as the
Company may in general meeting determine except
that the remuneration of any Auditors appointed to fill
any casual vacancy may be fixed by the Directors.
(a) The Auditor/s of the Company shall have a right of
access at all times to the books and vouchers of the
Company and shall be entitled to require from the
Directors and Officers of the Company such
information and explanation as may be necessary for
the performance of the duties of the Auditor/s.
(b) All notices of, and other communications relating
to, any general meeting of the Company which any
member of the Company is entitled to have sent to
him shall also be forwarded to the Auditors of the
Company; and the Auditor/s shall be entitled to attend
any general meeting and to be heard at any general
meeting which he attends to any part of the business
which concerns him as Auditor.
(c) The Auditors shall make a Report to the members
of the Company on the accounts examined by him and
on every Balance Sheet and Profit and Loss Account
and on every other document declared by the Act to
be part of or annexed to the Balance Sheet or Profit
335
and Loss Account, which are laid before the Company
in annual general meeting during his tenure of office,
and the Report shall state whether, in his opinion and
to the best of his information and according to the
explanation given to him, the accounts give the
information required by the Act in the manner so
required and give a true and fair view :
(i) in the case of the Balance Sheet, of the state of the
Company’s affairs as at the end of its financial year :
and
(ii) in the case of the Profit and Loss Account, of the
Profit and Loss for that financial year.
(d) The Auditor’s Report shall also state :
(i) whether he has obtained all the information and
explanations which to the best of his knowledge and
belief were necessary for the purpose of his audit;
(ii) whether, in his opinion, proper books of accounts
as required by law have been kept by the Company so
far as appears from his examination of those books
and proper returns adequate for the purpose of his
audit have been received from branches not visited by
him;
(iii) whether the report on the accounts of any branch
office audited under Section 228 by a person other
than the Company auditor has been forwarded to him
as required by clause (c) sub-section (3) of the
Section and how he has dealt with the same in
preparing the Auditor’s Report;
(iv) whether the Company’s Balance Sheet and Profit
and Loss Account dealt with by the report are in
agreement with the books of account and returns.
Accounts when audited and approved
to be conclusive except as to errors
discovered within three months
214
(e) Where any of the matters referred to in this Article
is answered in the negative or with a qualification the
Auditor’s Report shall state the reasons for the
answer.
Every account when audited and approved by a
general meeting shall be conclusive except as regards
any error therein discovered within three months next
after the approval thereof. Whenever any such error is
discovered within the said period, the accounts shall
forthwith be corrected and thenceforth shall be
336
conclusive
DOCUMENTS AND NOTICES
Service of Notice by member
215
Service of Notice on Registrar
216
Service of Notice on member by the
Company
217
A notice may be served on the Company or an Officer
thereof by sending it to the Company or Officer at the
Registered Office of the Company by post under a
certificate of posting or by registered post of by leaving
it at its Registered Office.
The term ‘Notice’ in this and the following clauses
shall summons, notice, requisition, order, judgment or
other legal papers and any document.
A notice may be served on the Registrar by sending it
to him at his office by post under a certificate of
posting or by registered post, or by delivering it to, or
leaving it for him at him at his office.
(a) A notice may be served by the Company on any
member either personally or by sending it by post to
him to his registered address or if he has no registered
address in India to the address, if any, within India
supplied by him to the Company for giving Notice to
him.
(b) Where a Notice is sent by post :
(i) Service thereof shall be deemed to be effected by
properly addressing prepaying and posting a letter
containing the document, provided that, where a
member has intimated to the Company in advance
that documents should be sent to him under a
certificate of posting or by registered post with or
without acknowledgement due, and has deposited
with the Company a sum sufficient to defray the
expenses of doing so, service of the document shall
not be deemed to be effected unless it is sent in the
manner intimated by the member; and
(ii) Such service shall be deemed to have been
effected;
(1) in the case of a Notice of a meeting at the
expiration of forty-eight hours after the letter
containing the same is posted, and
(2) in any other case, at the time at which the letter
would be delivered in the ordinary course of post.
337
By Advertisement
(c) A Notice advertised in a newspaper circulating in
neighborhood of the registered office of the Company
shall be deemed to be duly served on the day on
which the advertisement appears on every member of
the Company who has no registered address in India
and has not supplied to the Company an address
within India for the giving of Notices to him.
On Joint holder
(d) Any Notice may be served by the Company on
Joint-holders of a share/debenture by serving it on
joint holder named first in the Register
members/debenture holders in respect of
share/debenture.
Notice by Company and signatures
thereto
218
Authentication
proceedings
219
of
documents
and
the
the
of
the
On personal Representative
(e) A Notice may be served by the Company on the
persons entitled to a share in consequence of the
death or insolvency of a member by sending it through
the post in a prepaid letter addressed to them by
name, or by the title representatives of the deceased
or assignees of the insolvent or by any like
description, at the address, if any in India supplied for
the purpose by the persons claiming to be so entitled,
or until such an address has been so supplied, by
serving the document in any manner in which it might
have been served if the death or insolvency had not
occurred.
Any Notice given by the Company shall be signed by a
Director, or by such Officer as the Directors may
appoint and the signatures thereto may be written
printed or lithographed.
Save as otherwise expressly provided in the Act, a
document or proceedings requiring authentication by
the Company may be signed by the Director, the
Managing Director, the Manager, the Secretary or
other authorized Officer of the Company and need not
be under its Common Seal.
WINDING UP
Distribution of Assets
220
(a)Subject to the provisions of the Act, if the company
shall be wound up and the assets available for
distribution among the members as such shall be less
than sufficient to repay the whole of the paid up capital
such assets shall be distributed so that, as nearly, as
may be, the losses shall be borne by the members in
338
proportion to the Capital paid up, or which ought to
have been paid up, at the commencement of winding
up, on the shares held by them respectively. And if in
winding up, the assets available for distribution among
the members shall be more than sufficient to repay the
whole of the Capital paid up at the commencement of
the winding up the excess shall be distributed
amongst the members in proportion to the Capital
paid-up at the commencement of the winding up or
which ought to have been paid up on the shares held
by them respectively.
Subject to the provisions of the Act.
Distribution in specie of kind
221
(b) But this clause will not prejudice the rights of the
holders of shares issued upon special terms and
conditions.
(a) If the Company shall be wound up whether
voluntarily or otherwise, the liquidators may with the
sanction of a special resolution and any other sanction
required by the Act, divide amongst the contributories,
in specie or kind the whole or any part of the assets of
the Company, and may, with the like sanction vest any
part of the assets of the Company in trustees upon
such trusts for the benefit of the contributories or any
of them as the liquidators with the like sanction shall
think fit.
(b) If thought expedient, any such division may,
subject to the provisions of the Act, be otherwise than
in accordance with the legal rights of the contributories
(except where unalterably fixed by the Memorandum
of Association) and in particular any class may be
given (subject to the provisions of the Act) preferential
or special rights or may be excluded altogether or in
part but in case any division otherwise than in
accordance with the legal rights of the contributories
shall be determined or any contributory who would be
prejudiced thereby shall have the right, if any, to
dissent and ancillary rights as if such determination
were a special resolution passed pursuant to Section
494 of the Act.
Rights of shareholders in case of sale
222
(c) in case any shares to be divided as aforesaid
involved a liability to calls or otherwise, any person
entitled under such division to any of the said shares
may within ten days after the passing of the special
resolution, by notice in writing direct the liquidators to
sell his proportion and pay him the net proceeds and
the liquidators shall, if practicable act accordingly.
Subject to the provisions of the Act, a special
339
resolution sanctioning a sale to any other Company
duly passed may, in like manner as aforesaid,
determine that any shares or other consideration
receivable by the Liquidators by distributed amongst
the members otherwise than in accordance with their
existing rights and any such determination shall be
binding upon all the members subject to the rights of
dissent, if any, if such right be given by the Act
SECRECY CLAUSE
Secrecy Clause
223
(a) Every Director, Manager, Auditor, Treasurer,
Trustee, Member of a Committee, Officer, Servant,
Agent, Accountant or other person employed in the
business of the Company shall if so required by the
Directors, before entering upon his duties, sign a
declaration pledging himself to observe a strict
secrecy respecting all transactions and affairs of the
Company with the customers and the state of the
accounts with individuals and in matters thereto, and
shall by such declaration pledge himself not to reveal
any of the matters which may come to his knowledge
in the discharge of his duties except when required so
to do by the Directors or by law or by the person to
whom such matters relate and except so far as may
be necessary in order to comply with any of the
provisions in these presents contained.
(b) No member shall be entitled to visit or inspect any
works of the Company without the permission of the
Directors or to require discovery of or any information
respecting any detail of the Company’s trading, or
matter which may relate to the conduct of the business
of the Company and which in the opinion of the
Directors, it would be inexpedient in the interest of the
Company to disclose.
INDEMNITY AND RESPONSIBILITY
Directors and
indemnity
others
rights
to
224
(a) Subject to the provisions of Section 201 of the Act,
every Director, Managing Director, Whole time
Director, Manager, Secretary and other Officer or
employee of the Company shall be indemnified by the
Company against and it shall be the duty of the
Directors, out of the funds of the Company to pay all
costs, losses and expenses (including traveling
expense) which such Director, Manager, Secretary
and officer or employee may incur or become liable to
by reason of any contract entered into or act deed
340
done by him as such Director, Manager, Secretary,
Officer or Servant or in any way in the discharge of his
duties including expenses and the amount for which
such indemnity is provided, shall immediately attach
as lien on the property of the Company and have
priority between the members over all other claims.
Directors and other officers not
responsible for the acts of others
225
To appoint Managers etc.
226
To authorize by power of attorney
227
(b) Subject as aforesaid, every Director, Managing
Director, Manager, Secretary or other officer and
employee of the Company shall be indemnified
against any liability incurred by him in defending any
proceedings, whether civil or criminal in which
judgment is given in his favor or in which he is
acquitted or discharged or in connection with any
application under Section 633 of the Act which relief is
given to him by the Court and the amount for which
such indemnity is provided shall immediately attach as
a lien on the property of the Company.
Subject to the provisions of Section 201 of the Act, no
Director, Managing Director, Whole time Director or
other Officer of the Company shall be liable for the
acts, receipts, neglects or defaults Director or other
Director or Officer or for joining in any receipt or other
act for conformity or for any loss or expense
happening to the Company through insufficiency or
deficiency of title to any property acquired by order of
the Directors for or on behalf of the Company or for
the insufficiency or deficiency of any security in or
upon which any of or redeemable preference shares,
debentures or debenture stock and that without being
bound to keep the same separate from other assets or
to pay interest on the same; with power, however to
the Directors at their discretion, to pay or allow to the
credit of such fund interest at such rate as the
Directors may think proper.
To appoint and at their discretion to remove or
suspend such Managers, Secretaries, Officers, Clerks,
Agents and servants for permanent, temporary or
special service as they may form time to time think fit
and to determine their powers and duties, and fix their
salaries or emoluments and require security in such
instances and to such amounts as they may think fit
and from time to time to provide for the management
and transactions of the affairs of the Company in any
special locality in India in such manner as they may
think fit. The provisions contained in the clause
following shall be without prejudice to the general
powers conferred by this clause.
At any time and from time to time by power of attorney
341
to appoint any person or persons to be the Attorney or
Attorneys of the Company for such purpose) and with
such powers, authorities and discretions (not
exceeding those vested in or exercisable by the
Directors under these presents) and for such the
monies of the Company shall be invested or for any
loss or damage arising from the bankruptcy,
insolvency or other act of any person, company or
corporation, with whom any moneys, securities or
effects shall be entrusted or deposited or for any loss
occasioned by any error of judgment or oversight on
his part or for any other loss or damage or misfortune
whatever which shall happen in the execution of the
duties of the office or in relation thereto, unless the
same happens through his own dishonesty
SOCIAL OBJECTIVE
Social Objective
228
The Company shall have among its objectives the
promotion and growth of the national economy
through increased productivity, effective utilization of
material and manpower resources and continued
application of modern scientific and managerial
techniques in keeping with the national aspirations,
and the Company shall be mindful of its social and
moral responsibilities to the consumers, employees,
shareholders, society and the local community.
229
Wherever in the Companies Act, it has been provided
that the Company shall have any right, privilege or
authority or that the Company could carry out any
transaction only if the Company if so authorized by its
Articles, then and in that case these regulations
hereby authorize and empower the Company to have
such rights, privilege or authority and to carry such
transactions as have been permitted by the Act.
GENERAL POWER
General Objective
342
SECTION X - OTHER INFORMATION
MATERIAL CONTRACTS AND DOCUMENTS FOR INSPECTION
The following contracts (not being contracts entered into in the ordinary course of business carried on by
our Company or contracts entered into more than two (2) years before the date of filing of the Draft Red
Herring Prospectus) which are or may be deemed material have been entered or are to be entered into
by our Company. These contracts, copies of which will be attached to the copy of the Draft Red Herring
Prospectus will be delivered to the RoC for registration and also the documents for inspection referred to
hereunder, may be inspected at the Registered Office of our Company, from 10.00 a.m. to 4.00 p.m. on
working days from the date of filing of the Draft Red Herring Prospectus until the Bid/Issue Closing date.
Material Contracts
1. Memorandum of Understanding dated March 27, 2012 between us and Corporate Strategic
Allianz Limited appointing them as Book Running Lead Manager to this Issue.
2. Memorandum of Understanding dated March 05, 2012 between us and Sharepro Services (India)
Private Limited, as Registrar to this Issue.
3. Tripartite agreement dated [x] between us, NSDL and Registrar to this Issue.
4. Tripartite agreement dated [x] between us, CDSL and Registrar to this Issue.
5. Escrow Agreement dated [x] between us, the BRLM, Escrow Bankers, Syndicate Member and
the Registrar to this Issue.
6. Syndicate Agreement dated [x] between us, BRLM, and the Syndicate Member.
7. Underwriting Agreement dated [] between us, BRLM, and the Syndicate.
Material Documents
1. Memorandum and Articles of Association of our Company as amended from time to time.
2. Certificate of Incorporation dated August 10, 2010 issued to our Company, pursuant to
conversion from Partnership Firm to C. Mahendra InfoJewels Ltd. with CIN
U36912GJ2010PLC061930 issued by Registrar of Companies, Gujarat.
3. Resolution passed by Board of Directors of our Company at the meeting held on January 19,
2012 authorizing the issue, subject to the approval of the shareholders of our company under
section 81(1A) of the companies Act.
4. Resolution passed by the shareholders of the Company at the Extra Ordinary General Meeting
held on February 14, 2012 authorizing the issue under section 81 (1A).
5. Resolution passed by the shareholders of the company at the Extra Ordinary General Meeting
held on February 14, 2012 pursuant to section 293(1) (d) of the companies Act, 1956 relating to
borrowing powers.
6. Resolution passed by Board of Directors of our Company at the meeting held on August, 16,
2010 for the appointment of chairman.
7. Resolution passed by Board of Directors of our Company at the meeting held on August, 16,
2010 for the appointment of Managing Director.
343
8. Resolution passed by Board of Directors of our Company at the meeting held on December 26,
2011 for the appointment of Whole Time Director and Resolution passed by the shareholders of
the company at the Extra Ordinary General Meeting held on January 24, 2012
9. Copy of Restated Audit Report of the Statutory Auditors R. H. Modi & Co., Chartered
Accountants, dated March 02, 2012 and their consent to include the same in the DRHP.
10. Copies of Audit Reports of our Company for the periods ended on March 31, 2011 and
September 30, 2011.
11. Copy of Statement of Tax Benefit dated March 10, 2012 issued by Statutory Auditors R. H. Modi
& Co., Chartered Accountants and their consent to include the same in the DRHP.
12. Copy of certificate from Statutory Auditors, R. H. Modi & Co., Chartered Accountants dated March
10, 2012, regarding the sources and deployment of funds.
13. Consents in writing of: our Directors, our Company Secretary, our Compliance Officer, BRLM, the
Statutory Auditors, Bankers to our Company, Registrar to the Issue; Legal Advisor to the Issue;
Syndicate Members*; IPO Grading Agency*; Underwriters, Refund Bank(s)*, to act in their
respective capacities.
* The aforesaid will be appointed and their consents as mentioned above would be obtained prior to filing
the Red Herring Prospectus with the ROC.
14. Due Diligence Certificate dated March 19, 2012, to SEBI from Corporate Strategic Allianz Limited.
15. In-principle listing approvals from NSE and BSE dated [] and [] respectively.
16. SEBI observation letter no. [] dated []
Any of the contracts or documents mentioned in the Draft Red Herring Prospectus may be amended or
modified at any time if so required in the interest of our Company or if required by the other parties,
without reference to the shareholders subject to compliance of the provisions contained in the Companies
Act and other relevant statutes
344
DECLARATION
We, the Directors of C. Mahendra InfoJewels Limited, hereby declare that all the relevant provisions of
the Companies Act, 1956 and the guidelines issued by the government or the guidelines issued by the
Securities and Exchange Board of India, established under Section 3 of the Securities and Exchange
Board of India Act, 1992, as the case may be, have been complied with and no statement made in this
Draft Red Herring Prospectus is contrary to the provisions of the Companies Act, 1956 or the Securities
and Exchange Board of India Act, 1992 or rules made there under or guidelines issued, as the case may
be. We further certify that all statements in this Draft Red Herring Prospectus are true and correct.
SIGNED BY ALL THE DIRECTORS, COMPLIANCE OFFICER AND CHIEF FINANCIAL OFFICER
______________
Jesingbhai Parikh
(Chairman)
_________________
Shrikant Parikh
(Managing Director)
_________________
Sona Parikh
(Whole- Time Director)
_________________
Amulbhai Patel
(Independent Director)
_________________
Malaybhai Karbhari
(Independent Director)
_________________
Shankar Bhagat
(Independent Director)
_________________
Akash Parik
(Compliance Officer)
_________________
Sona Parikh
(Chief Financial Officer)
Date: 29.03.2012
345